Demand for the Spanish ‘Golden Visa’ scheme was hit hardest of all by the pandemic, and is recovering more slowly than other types of demand for property in Spain.
The number of Golden Visa investors given residency permits for real estate investments fell from 681 in 2019, to 394 in 2020, according to Spanish government figures. Year-on-year, the decline was 42% compared to an overall decline of 25% in foreign demand.
The so-called ‘Golden Visa’ scheme allows non-EU nationals to get a conditional residency permit and long-term path to Spanish citizenship in return for an investment of 500,000€ or more of own funds in Spanish property, amongst other types of investment. You can learn more about it here: the Spanish Golden Visa explained.
The Spanish Golden Visa was introduced in 2013 to attract foreign capital to Spain, and help mop up some of Spanish property glut that blighted the market after the real estate bubble burst in 2008. However, it was badly designed from the start, and performed poorly compared to similar schemes in other countries, despite tweaking in 2015 to make it more attractive.
For example, in 2016, the Portuguese scheme attracted 2,344 investors, compared to 661 in Spain, according to official figures.
The biggest market for the Spanish Golden Visa since its launch has always been China, followed by Russia a long way behind. In 2019 Chinese investors were 67% of the market, and Russians 6% (chart).
Now the UK has left the EU there are hopes that the British will become significant players in the Spanish Golden Visa market, but that remains to be seen. In the meantime, Chinese and Russian demand have been hit hardest of all by the pandemic (chart), though Chinese government policy to restrict capital outflows may also play a part.
Golden Visa demand has recovered somewhat this year, but not as much as overall foreign demand, and nowhere near the levels prior to the pandemic. There were 324 Golden Visa investors registered with the Spanish Foreign Office in the first seven months of the year, suggesting the market will finish the year higher than last year, but not by much.
Whilst overall foreign demand in the first quarter of this year was down 18% compared to the same time last year, the two biggest markets for Golden Visa demand – China and Russia – were down 58% and 33% respectively.
Though Golden Visa sales this year are expected to post a slight increase on last year, it looks like this segment of the foreign market will struggle the most to recover from the pandemic.