Spain is not ending the Golden Visa program. However, the government is planning serious changes to the investment options.
The Spanish government is taking some steps to moderate the golden visa program. Historically, Spain’s residency by investment program is known to allow foreign investors to obtain residency by buying a property worth €500,000 or more. These days, why the program’s future is critiqued depends on the announcement made during the Council of Ministers in April 2024. The announcement signals that there is going to be a significant shift in immigration and housing policies that aim to address domestic housing challenges in Spain.
Popularity of Spain’s Golden Visa Program
Spain’s Golden Visa Program started in 2013, and since then, it has continued to attract foreign capital. This attention was especially intense during the eurozone crisis, which also severely impacted Spain’s real estate market.
Over 6,200 golden visas from Spain have been granted for the property investment option alone. The program became particularly popular among Chinese, Russian, and Iranian investors. However, especially after Brexit, the United Kingdom also had significant numbers and the United States, with Americans looking for a second destination in Europe.
House Market in Spain and the Evaluations
The economy of the country gets foreign capital through the Golden Visa investment. However, as the Spanish government has highlighted, recent evaluations show that 94% of the golden visas given in Spain focused on the major urban areas. So, housing markets in Madrid, Barcelona, and the Balearic Islands are increasingly strained.
The Prime Minister of Spain, Pedro Sánchez stated that the reform, which is to remove the real estate investment option from the golden visa investment alternatives, aims to transition housing from a “speculative business” to a fundamental right.
From this emphasis, we understand that, as it happened in Portugal, the expectation from golden visa investments is getting away from the property market but seems to be continuing with other investment options. However, this change is not going to happen immediately. The exclusion of real estate buying to get a residency in Spain is not expected to be active until 2025 but the date is not announce officially yey.
What are the Alternatives to Property Investment?
Even if the intended abolition of property-based golden visas becomes a reality in Spain, the golden visa program will still be available with other investment alternatives. Those can be substantial investments in government bonds or dynamic Spanish companies. When real estate investment is still an option, these other investment alternatives seem to keep representing a smaller fraction of all the overall golden visas issued in Spain.
The Critics Against the Real Estate Investment Option
Why do European countries, such as Portugal and Spain, seem to have critics against real estate investments made by foreigners who apply for golden visa programs?
The critics are mainly on the underlying issues of housing availability and affordability in Spain, as Francisco Iñareta from Idealista suggests. The golden visa seems unlikely to resolve this problem. The challenges mostly stem from the escalating demand for housing in Spain and a dwindling supply. Therefore, it doesn’t seem to be a problem occurring from the investment-driven residency program but the results and effects on the real estate market and the local buying capabilities.
Golden Visa Trends in Europe
Spain’s decision to move to a golden visa program without real estate investment follows Portugal’s updates. Portugal’s golden visa program is still active and receives applications through the fund investment option, which became the popular investment type after the changes.
Some countries, like the UK and Ireland, have already terminated their respective golden visa programs. Meanwhile, Portugal and the Netherlands continue with their modified programs that exclude property investments.
Portugal’s Golden Visa program became more attractive after changing its citizenship law in 2024. After the announcement, they made it easier to apply for citizenship through the Golden Visa program. If you apply for the Portuguese Golden Visa program, you can apply for citizenship after the 5-year waiting period, which starts to count with the initial residency application regardless of the approval.
How Will the Program Move Forward?
It is still a question of how Spain will manage the transition to the golden visa program without the real estate investment option. The upcoming reform reflects the need to balance foreign investments with affordable housing for the local population in Europe. Therefore, this recognition grows in Europe and among potential investors.
These changes still unfold. Also, potential investors and current visa holders might still consider residency options as investment opportunities in Spain’s Golden Visa program.
The debate continues about the best way to balance economic incentives with social welfare. However, discussions around European golden visa programs suggest that these programs help shape the future of residency through investment across the continent.
Frequently Asked Questions
Can I still apply for a Spain Golden Visa by buying real estate?
Yes, you can submit your Golden Visa application in Spain by investing in real estate worth €500,000 or more.