For more than a decade, real estate was the natural asset of investment migration. If an investor wanted European residence, the answer was often simple. Buy a property. The property provided the investment. The government provided the residence permit. The investor received both.
It was an extraordinarily successful model.
But today the question is becoming more difficult. Is real estate still the best investment migration asset?
I am not convinced that it is.
The Original Attraction
Real estate had obvious advantages.
It was tangible.
It was understandable.
It could be visited.
It could potentially generate rental income.
It could appreciate.
And for wealthy international investors, owning property in Europe had an obvious lifestyle component.
The investor was not simply buying an immigration product.
He was buying an asset he could use.
That made the Golden Visa proposition extremely easy to sell.
But Simplicity Has a Cost
The simplicity of property was also its weakness.
The investment was concentrated.
One property.
One location.
One market.
One tenant base.
One exit strategy.
And often one developer.
The investor could therefore end up taking significant investment risk without necessarily appreciating it.
The residence benefit could make an otherwise questionable investment appear more attractive.
That is dangerous.
The Visa Can Distort the Investment Decision
Consider two properties.
One is a very good investment but does not qualify for residence.
The other qualifies for a Golden Visa but has a mediocre yield and limited liquidity.
Which one does the investor choose?
The second may win.
Not because it is the better investment.
But because it provides an additional benefit.
This is the fundamental problem with property-based investment migration.
The immigration benefit can distort the investment decision.
Portugal Has Already Moved On
Portugal provides the clearest example.
Its Golden Visa became one of Europe’s most successful property-based programmes.
But the government ultimately removed the residential real estate route.
The legislation enacted in October 2023 instead retained qualifying investment routes including €500,000 investments into non-real-estate collective investment undertakings, subject to specific conditions.
This is a significant change in philosophy.
Portugal is effectively saying that the capital is still welcome.
But the government wants the capital deployed differently.
That is a much more interesting development than simply the closure of a Golden Visa.
Greece Has Taken a Different Route
Greece has taken the opposite approach.
Rather than remove property, it has attempted to regulate the market through investment thresholds.
The €500,000 threshold was introduced in selected high-demand markets while the lower threshold remained available elsewhere.
This recognises an important reality.
Property markets are local.
The economic impact of €250,000 of foreign capital in central Athens can be very different from the impact of the same capital in a less-developed Greek region.
Greece is therefore attempting to manage the geography of investment migration.
Spain Remains a Property Market
Spain provides another contrast.
As of July 2024, Spain still offered residence through a €500,000 real estate investment.
But Spain’s framework also offered other qualifying investments, including €1 million in shares or investment funds and €2 million in Spanish public debt, as well as qualifying business projects.
That is interesting.
The Spanish model already demonstrates that real estate does not have to be the only investment migration asset.
The investor has alternatives.
The question is whether investors will increasingly choose them.
What Does the Investor Actually Want?
The answer depends upon the investor.
A family buying a holiday home in Spain may genuinely want property.
An investor with substantial existing European real estate exposure may not.
The second investor may prefer:
Private equity.
Investment funds.
Venture capital.
Infrastructure.
Listed securities.
Private credit.
Businesses.
The investment migration product therefore needs to recognise that not every wealthy investor has the same portfolio.
The Family Office Changes the Equation
This is where the family office becomes particularly important.
A family office does not normally ask:
What asset gives me a residence permit?
It asks:
What should this €500,000 or €1 million allocation do within the family’s overall portfolio?
That is a completely different approach.
The family may already own €5 million of property.
Buying another €500,000 apartment may increase concentration.
Investing €500,000 into a diversified investment vehicle may actually improve the portfolio.
The immigration benefit can then sit on top of a rational asset-allocation decision.
Diversification Matters
The investment migration industry has historically talked about diversification of residence.
But it should also talk about diversification of assets.
If the investor is moving to Europe because he wants greater geographic diversification, it makes little sense to create excessive concentration in European residential property.
The investor may be diversifying his residence while concentrating his capital.
That is not necessarily good portfolio management.
Property Is Not Liquid
There is another obvious issue.
Real estate is relatively illiquid.
Selling can take months.
Sometimes longer.
Transaction costs can be substantial.
Taxes can apply.
Agents need to be paid.
Legal costs arise.
The investor may also need to discount the price to achieve a rapid exit.
A fund may also be illiquid.
Private equity certainly can be.
But at least the liquidity characteristics are normally part of the investment structure from the beginning.
The investor knows that he is making a long-term investment.
Property Has Concentration Risk
The risk becomes particularly obvious with a single property.
Suppose an investor buys an apartment in a city because it qualifies for residence.
The investor is exposed to:
The local economy.
The local property market.
Interest rates.
Rental demand.
Construction supply.
Planning policy.
Taxation.
Property regulation.
And changes in the investment migration programme.
That is a lot of risk attached to one asset.
The Immigration Benefit Is Not Permanent
This is another consideration.
Governments change programmes.
Portugal demonstrated that.
Greece demonstrated it by changing thresholds.
Other countries have closed programmes entirely.
The investor therefore cannot assume that the immigration benefit will remain unchanged forever.
The property, however, remains.
This is why the property should make sense independently.
The Question I Would Ask
If I were evaluating a property-based investment migration opportunity, I would ask one question first:
Would I buy this property if it did not provide residence?
If the answer is no, I would stop.
That does not mean the property is necessarily bad.
It means the immigration benefit is doing too much of the investment analysis.
The Fund Model Is Different
A fund introduces a different relationship.
The investor commits capital.
The manager invests it.
The portfolio is diversified.
The investment mandate is defined.
The investor receives reporting.
There is professional governance.
The investment has a clear holding period.
And the immigration benefit is attached to the investment rather than to a specific property.
This can produce a much more institutional product.
But Funds Have Their Own Risks
It would be wrong to suggest that funds automatically solve everything.
They do not.
A badly managed fund is still a bad investment.
The investor needs to analyse:
The manager.
The strategy.
The underlying assets.
Fees.
Leverage.
Valuation.
Liquidity.
Governance.
Conflicts.
Exit strategy.
Historical performance where relevant.
Regulation.
A fund structure creates a framework.
It does not create investment quality.
The Investment Migration Industry Needs to Grow Up
This is perhaps the larger lesson.
For years, investment migration was marketed primarily as an immigration service.
The investment component was sometimes treated almost as a necessary administrative step.
That approach is becoming obsolete.
The wealthy investor increasingly expects institutional investment standards.
He wants to know where the money goes.
He wants to know who manages it.
He wants to know what return is expected.
He wants to understand the downside.
He wants to understand liquidity.
And he wants to know what happens if the immigration rules change.
That is wealth management.
Governments Are Also Becoming More Sophisticated
Governments are asking different questions too.
They no longer necessarily want the largest possible number of investors.
They want the right investment.
That means governments can potentially distinguish between:
Residential property.
Commercial property.
Businesses.
Infrastructure.
Funds.
Private equity.
Venture capital.
Research.
Technology.
This creates a much more sophisticated investment migration market.
The Best Asset May Be the One That Creates Economic Value
This is where policy and investment begin to overlap.
A government may reasonably prefer €500,000 invested into a Portuguese company over €500,000 invested into an existing apartment.
The company may employ people.
It may expand.
It may export.
It may pay taxes.
It may create intellectual property.
It may attract further capital.
The economic multiplier can be much greater.
That does not mean every business investment is better than every property investment.
It means the policy objective is different.
Real Estate Still Has a Role
I would not write off property.
Far from it.
Real estate remains one of the world’s major asset classes.
It can provide:
Income.
Inflation protection.
Capital appreciation.
Collateral.
Portfolio diversification.
And personal use.
For an investor who genuinely wants European property, a property-based residence programme can still be highly attractive.
The problem is treating property as the default solution for every investor.
The Investor’s Personal Balance Sheet Matters
This is the direction in which the market should move.
Instead of asking:
Which Golden Visa is cheapest?
Ask:
What does the investor already own?
If the investor owns substantial property, perhaps a fund is better.
If the investor owns primarily financial assets, perhaps property adds diversification.
If the investor owns a business, perhaps an entrepreneurial route is more appropriate.
If the investor is a private equity professional, perhaps an investment route aligned with that expertise makes more sense.
The migration solution should fit the balance sheet.
Residence and Investment Should Be Separated
This is a principle I increasingly believe should guide the industry.
First:
Determine where the family wants to live.
Second:
Determine the immigration route.
Third:
Determine the investment strategy.
Then connect the two.
The investor should not buy an inferior asset simply because it happens to provide a residence permit.
This Also Reduces Political Risk
There is a benefit for governments.
If investment migration is based on a diversified investment framework, the government is less dependent upon residential property.
That reduces the political conflict with local housing markets.
It also makes the programme easier to defend.
The government can say:
We are attracting capital.
We are financing businesses.
We are creating economic activity.
We are not simply selling residence in exchange for apartments.
That is a stronger political argument.
Europe Is Moving in This Direction
The direction is becoming increasingly visible.
Portugal has removed its property route.
Greece has increased thresholds in selected markets.
Spain has continued to offer property while also recognising financial and business investment.
Other European jurisdictions have restricted or closed investor programmes.
The common thread is that the old model is being questioned.
The €500,000 Investor Has Choices
This is perhaps the most important development.
A wealthy investor today has more choices than the investor of ten years ago.
He can invest in:
Property.
Funds.
Private equity.
Businesses.
Infrastructure.
Financial assets.
Different jurisdictions.
Different residence regimes.
Different tax systems.
The investor is therefore becoming more powerful.
Governments have to compete for capital.
Competition Will Be Based on Quality
The next generation of investment migration programmes will therefore compete on more than price.
They will compete on:
Investment quality.
Manager quality.
Regulation.
Tax.
Residence rights.
Family benefits.
Political stability.
Liquidity.
Economic substance.
And long-term programme stability.
This is a much more sophisticated market.
The Property Golden Visa Was a Great Product
It is important not to rewrite history.
The property Golden Visa worked.
It brought billions of euros into Europe.
It helped developers.
It created construction activity.
It provided governments with foreign capital.
And it gave investors a simple route into Europe.
But markets evolve.
What worked in 2013 does not necessarily represent the best product in 2024.
The New Question
The question should no longer be:
Which property qualifies?
It should be:
Which investment makes the most sense for the investor?
That is a much better question.
If the answer is property, buy property.
If the answer is private equity, invest in private equity.
If the answer is a diversified fund, use a fund.
The immigration benefit should complement the investment decision.
It should not dictate it.
Real Estate Will Survive
I therefore do not believe we are witnessing the death of real estate in investment migration.
We are witnessing the death of its monopoly.
That is a positive development.
It allows investors to choose the asset class that best fits their circumstances.
It allows governments to attract more productive forms of capital.
And it forces the investment migration industry to become more sophisticated.
The Future Is Asset-Agnostic
The ultimate investment migration product may not be a Golden Visa attached to a particular asset.
It may be a regulated investment framework.
The investor commits capital.
The capital is deployed according to defined rules.
The investor receives the appropriate residence benefit.
The country receives productive foreign investment.
And the investor remains focused on return and risk.
That is how investment should work.
The Real Test
There is a simple test for the future.
Take away the residence permit.
Would the investor still make the investment?
If yes, the structure is probably on the right track.
If no, then the investment needs much greater scrutiny.
The immigration benefit should be valuable.
But it should not hide investment risk.
Real Estate or Something Else?
For some investors, the answer will still be real estate.
For others, it will be a fund.
For others, private equity.
For others, a business.
There is no universal answer.
And that is precisely the point.
The wealthy investor is no longer looking for a Golden Visa.
He is looking for an investment strategy that happens to provide a Golden Visa.
That is a much more mature market.
And ultimately, it is probably a better one.