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The end of Golden Visas in Spain to have limited impact, experts say
The President of the Spanish Government, Pedro Sánchez, announced the end of golden visas, and the Council of Ministers has only taken 24 hours to formalise the decision. The Government has begun the process to remove granting residence permits to non-EU foreigners who invest over €500,000 in housing. idealista/news has spoken to Spain's leading luxury real estate agents to find out what they think. And they believe that, although it is a blow to the sector, as it removes an appealing option for some investors, the expected damage is very limited, since most foreign investors do not invest in Spain to obtain a residence permit. However, they do feel that the decision is a sign that foreign investment is not welcome in Spain.
The golden visa was originally introduced as a way to attract international clients from outside the EU and Schengen Area to Spain. However, the actual number of golden visa transactions has been very low since it was introduced in 2013. “Most international client transactions in Spain are from within the European Union or they do not involve the golden visa scheme. Therefore, the actual impact on prices and transactions has been and will be extremely limited. However, it is likely that now, after it was announced that the golden visa scheme is to be phased out, there will be an avalanche of investors who were planning to make use of this scheme," the Lucas Fox agent explains.
Luis Valdés, Managing Director of Residential Sales Advisory at Colliers, believes that the impact is negative but irrelevant for the real estate sector. He argues that "most foreign investors in Spain, are not interested in obtaining the golden visa and are more interested in Spain's basic features – the quality of life, safety, education and leisure facilities. Madrid or the Costa del Sol are two clear examples. From our experience as advisors in the luxury residential market, we can confirm that buyers of this type of real estate asset do not base their purchase decision on obtaining the golden visa".
François Carriere Pastor, CEO of Coldwell Banker Spain, believes that "although the golden visa represents a very small percentage of home purchases made by foreigners in Spain, abolishing it is a protectionist measure. By doing so, we are again sending signals to international buyers that foreign investment is not welcome in Spain. However, from an operational point of view, Coldwell Banker believes that this measure will have no effect on property prices in Spain as in many markets the problem is that there is too little supply. In the Spanish property market, most foreign buyers are not interested in the golden visa".
According to government figures, around 14,500 golden visas have been issued since 2013, which contrasts with the approximately 600,000 homes sold each year across Spain without relying on these visas. "Honestly, I have serious doubts that the bans will be effective and achieve their purpose of alleviating the problem of housing being inaccessible. I still think the best strategy is to increase the housing supply and construct more new builds – both public and private," adds Gutiérrez.
A Luxury real estate firm agrees that the real estate business will be minimally affected. In 2023, only 3,200 golden visas were granted, which is a tiny fraction of the 87,000 housing transactions carried out by foreigners in Spain. There may be a slight decrease in foreign interest in the lower end of the market, mainly affecting owners of standard homes. However, no significant change is expected in the luxury sector. The golden visa has been active in Spain for 10 years, so most people who wanted to obtain one have already done so," the company says.
The luxury sector's reading coincides with that of the rest of the real estate sector. Francisco Iñareta, idealista spokesperson, assures that "the announced measure will not have any impact on the real estate market. According to the latest official data, between 2013 and 2022, less than 5,000 golden visa residence permits were granted in Spain, which is less than 0.1% of the 4.5 million homes sold in the same period. Non-EU foreigners buying homes has not led to any conflict in Spain. Spain's housing problem is not caused by golden visas but by the ever-increasing lack of supply and the exponential increase in demand to buy and rent. The measure announced today, which focuses on international buyers rather than encouraging new housing to come onto the market, is yet another misdiagnosis. It will change nothing because in reality the golden visas never made any difference."
Does the golden visa attract foreign investment?
Another issue on the table is whether the golden visa has ever been considered a selling point for foreign buyers or whether it has simply been handled as an add-on to their purchase. For Lucas Fox, the golden visa was primarily useful as a promotional tool to attract non-European buyers to the Spanish property market, but, in reality, the proportion of investment by buyers from these areas has always been comparatively low. "The Spanish property market's reputation has increased significantly in recent years and there are now so many compelling reasons to invest in Spain that we believe cancelling the golden visa scheme will have an imperceptible impact on the market," the luxury real estate company says.
For Mikel Echavarren, CEO and president of Colliers and one of the most reputable voices in Spanish real estate, "In the case of the luxury properties marketed by Colliers, we do not see the golden visa as a draw, as most owners do not want or need residency in Spain. For this type of profile, the main focus is the product's appeal and the market in which the investment is made, normally Madrid or prime destinations such as the Costa del Sol or the Balearic Islands".
Echavarren also adds, "If we look at the Registrars' data, last year 589 golden visas were granted for property purchases for 586,913 homes sold. This represents 0.1% of the market and is a figure that has remained stable over the 10 years this measure has been in place. Therefore, its impact will be minimal and it will certainly not be a measure that will contribute to resolving Spain's serious housing problems. In short, it's a case of attacking windmills thinking they are giants".
Barnes also believes that it is not a selling point and even gives practical examples as to why: "At Barnes, most of our clients are foreigners, but in the six years that we have been operating in Spain, only two have applied for the golden visa: an American and a Filipino", they conclude.
For Enrique López Granados, President of Caledonian, the golden visa is a selling point that can bring wealth to the country. "We have clients who have bought houses worth €7 million, who have spent half a million euros on decoration, who have spent €2 million on cars... and who have come here because of the golden visa. And you say, what does this man do? Well, he clearly brings a lot of wealth. To Malaga, for example, in this case. Is that bad for Spain? No, it's very good for Spain. Does it increase house prices? No, house prices are not going up. House prices are not affected by a man coming and buying a €7-million house, which practically only exists for him".
"House prices are the flats that sell for €4,000 or €3,000 or €5,000 per square metre in Madrid or wherever, to the average Spaniard, who is not at all affected by the golden visa. Because the golden visa client is not the average Spaniard or even the Spaniard who buys an affordable house and cannot afford it. Because they are obviously different market sectors," concludes the executive.