Is Europe’s Golden Age of Golden Visas Really Over?

A recent article in Business Insider declared that “The Golden Age of Golden Visas is Over in Southern Europe.”

The article goes on to say that the proximate cause of the alleged death of golden visas is skyrocketing housing costs in southern Europe.

But is either one of those claims true?

As with Mark Twain, claims of the “death” of golden visas are greatly exaggerated.

A golden visa is any long-term residence permit in exchange for an investment or donation in a country. It’s not defined by a residential property investment.

Every country mentioned in this article—from Greece to Portugal—offers golden visas today. It’s true that Spain and Portugal have ended the residential in property option, but there are other ways to get residency through investment.

Like most uninformed journalists who write on this topic, Business Insider is confusing a visa based on buying a home with the broader category of golden visas. Don’t fall for that. There are plenty of golden visas still available.

Now on to the second issue… whether residential golden visas caused housing markets to become overpriced.

There is certainly a link between rising property prices and rents and golden visas based on investments in housing. In sought-after cities, sellers knew that if they held out, they could get an offer at the minimum golden visa investment. They didn’t need to sell to local buyers for a lower price. That effectively put a floor price under local properties—one locals couldn’t afford.

The second issue was that most golden visa holders didn’t live in their properties. The overwhelming majority are from China and had no immediate desire to live in Europe. They just wanted to park some wealth outside the country and have a Plan B for themselves. Instead, they rented them out on the Airbnb market, or more rarely, as long-term rentals.

So, it’s true that in some cities housing prices have been affected by golden visas. But that’s not the only—or even biggest—problem for housing affordability.

The economies of Portugal, Spain, Italy, and Greece are growing faster than northern European countries. In the post-COVID world, international tourism has picked up dramatically, as has the desire to retire in lower-cost destinations. That’s led to a flood of immigrants from all over the world, but especially from the US, Canada, and Northern Europe. This pushes up housing prices even if people aren’t buying it for investment purposes.

But the biggest problem is the housing supply. These countries have never needed to develop residential housing stock this quickly. Their systems aren’t set up for it. Land use and building permits take too long to approve. There’s a shortage of building materials—and above all, construction workers.

This means that the traditional response to constrained supply in the housing market— delivering more housing—isn’t happening fast enough. Increased demand is pushing up prices, but not necessarily because of residential golden visas.

In the long term, European housing markets will stabilize. But I doubt that we will see the return of golden visas in return for housing investment. Governments have learned that a one-off flow of foreign money for property investment is no match for the steady stream of monthly income that retirees and digital nomads bring in. Those are going to be the main avenues for foreigners to get residency in Europe from now on.