Home News The Golden Visa Program, once a boon, has lost its luster

The Golden Visa Program, once a boon, has lost its luster

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When young doctor Ana Jimena Barba started working at a hospital in Madrid last year, she moved half an hour outside the city to live with her parents until she saved enough money to buy her own House of. But when she started looking at houses in the same village, almost all of them sold for more than half a million euros.

Quantity – nearly 20 times more than the actual quantity average annual salary In Spain – it happens to be equivalent to the cost of the country’s “golden visa”, a program that offers residency to wealthy foreigners who buy real estate there. Ten years later, the scheme has attracted billions of euros in investment but also contributed to a painful housing crisis for its own citizens.

“I can’t afford anything,” said Dr. Barba, an allergist who works 100 hours of overtime every month to save money. “It’s unfair if foreigners are driving up prices for those of us who live here,” she said.

Faced with growing pressure to address its housing crunch, Spain said this month it would scrap Its golden visa is the latest move by European governments in a wider withdrawal from the scheme.

At the height of Europe’s debt crisis in 2012, six euro zone countries offered the visas to help fill widening budget deficits. Countries in need of international assistance—— Spain, Ireland, Portugal and Greece Among them, it is particularly desperate for cash to repay creditors and sees a way to bring in investors while reviving the moribund property market.

Countries received a windfall: Spain alone issued 14,576 visas to wealthy buyers who invested more than €500,000 in real estate. But the prices they can afford are squeezing people like Dr. Barba out of a market already inflated by the rise of Airbnb and the lure of Wall Street investors.

“Access to housing must become a right, not an exercise in speculation,” Spanish Prime Minister Pedro Sánchez said in a speech this month announcing the end of the country’s golden visa program. “Big cities face high market pressures. “It’s almost impossible for people who already live, work and pay taxes to find decent housing.”

These visas allow people from outside the EU to easily purchase temporary residency, sometimes without even having to live in the country. Investors from China, Russia and the Middle East are buying real estate through them.

In recent years, British nationals have followed suit and snapped up properties in Greece, Portugal and Spain in the wake of Brexit, and a growing number of Americans have joined them. enjoy a lifestyle They can’t afford it in big American cities.

But golden visa schemes across Europe are now being phased out or shut down as governments seek to undo the damage to property markets. After Russia invaded Ukraine, EU officials urged governments to end such practices, warning they could be used for money laundering, tax evasion and even organized crime.

Portugal, which has received more than 5.8 billion euros in investment through visas, revised plans in October to cancel real estate investment projects in a bid to reduce speculative buying and cool an overheated real estate market.The large influx of foreigners has Thousands of low-income Portuguese displaced Citizens from families in cities like Lisbon.

The Lisbon government is trying to address the issue of affordable housing with new rules that require landlords to rent vacant apartments to families, limit rents and convert some commercial properties into housing.

Ireland The program was shut down last year in part to address concerns that Russian nationals were at risk money laundering Pass through it.

GreeceAs one of the last countries in Europe to offer golden visas, the foreign investment threshold in the Athens area and popular islands such as Mykonos and Santorini has been raised from 500,000 euros to 800,000 euros. The country’s Prime Minister Kyriakos Mitsotakis acknowledged that there is a severe housing shortage and that the rental market is under pressure, especially around Athens, but he said the government still hopes to attract investors. From 2021 to 2023 alone, Greece will raise 4.3 billion euros in investment through visas.

A Report A March report from the Institute of Labor Economics said visa programs help stimulate economic development in countries that offer them. But governments need to strike a “delicate balance between reaping economic benefits and guarding against potential risks,” including money laundering and rampant gentrification, the report said.

A pullback is coming Wider housing crisis sweeps EuropeAfter years of profound changes in the housing market, more and more middle-income workers have been squeezed out, including doctors, teachers and police officers.

Gentrification has been spreading across European cities for decades, but the rise of Airbnb and other short-term rental providers has accelerated the affordability crisis. This is especially true in countries hit by Europe’s debt crisis, where property owners are finding they can make more money renting to tourists than to locals whose finances are being squeezed by austerity plans.

The golden visa program adds to the pressure. Greece is initially offering five-year residence visas to foreigners who invest €250,000, and there are a number of apartments and houses for sale around Athens and on the breezy Greek islands. sudden outbreak Prices ranging from low to €250,000 are out of reach for most Greeks.

Laura McDowell, an agent at Athens-based Mobilia Real Estate, said short-term rentals are making city center rentals unaffordable, while investors from multiple countries are adding homes bought through the golden visa program. The problem becomes even more severe when converting to a vacation rental. Further reduce the supply of affordable housing.

The scheme has particularly attracted Chinese citizens, many of whom flew to Athens with their luggage Suitcase full of cash. Chinese investment companies are also buying buildings in low-income neighborhoods and student housing estates, renovating apartments and reselling them to visa seekers. Today, even in once unpopular areas in and around Athens, entire apartment blocks are owned mainly by foreigners.

“The prices that golden visas drive up are not coming down,” Ms. McDowell said. “The Greeks have been priced out.”

In Spain, Chinese investors account for nearly half of visa applicants, followed by Russian investors. Spanish Culture Minister Ernest Urtasun said low interest rates set by the European Central Bank had exacerbated the problem in recent years by luring more property investors away from the visa scheme.

The Spanish government plans to build 40,000 social homes for people with limited resources as part of a wider plan to restore affordable housing.

But it’s not certain that this will help people like Dr. Barba quickly. Despite Spain’s recovery from the financial crisis, wages have failed to keep pace with growth in the housing market. Nearly one in five workers earns the minimum wage of €1,134 per month, while rents in Madrid have increased by 15% in 2023. Inflation of 3.2% is adding to the pressure.

Dr. Barba has been saving money for a down payment on a home for the past three years. When she started training as an allergist at a city center hospital, she rented a room in a shared apartment in Barcelona. But her monthly income is consumed by basic living expenses such as food, rent and transportation.

In order to save more, she transferred to a hospital in Madrid and now lives with her parents outside the city, rent-free, working overtime and raising her salary to 1,900 euros. But even in her parents’ village, houses cost half a million euros and she despaired.

“It takes years to save enough for a down payment on a home,” Dr. Barba said. “Buying a house is just a dream.”

Rachel Chandler Reporting from Madrid, and Nikki Kisantonis From Athens.

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