December 18, 2023

The year ahead: 2023's political legacy


In 2023, Portugal experienced significant political turmoil marked by the dissolution of its Golden Visa and Non-Habitual Resident (NHR) schemes, as well as the resignation of Prime Minister António Costa amid corruption allegations. This period of instability, although challenging, often paves the way for strategic long-term investment opportunities.

The Golden Visa, which had been a major driver of foreign investment by offering residency in exchange for real estate purchases, was discontinued as part of the government's "Mais Habitação" housing bill aimed at addressing housing affordability and speculation issues. The NHR scheme, which provided significant tax breaks to new residents, also saw its end, though a transitional regime, known as NHR 2.0, has been introduced to retain some benefits for specific employment sectors and geographic areas.

Despite these changes, Portugal's historically notable resilience to political volatility and its proclivity for investor complexity position it uniquely as a favourable destination for distressed asset operators. As the political landscape evolves, investors are eyeing 2024 with optimism, leveraging the current uncertainties to secure high-value assets at potentially lower costs. This strategic approach could yield significant returns, particularly in touristic real estate and infrastructure sectors, which remain integral to Portugal's economic framework.

As PortmanLX's Managing Partner Oliver observes, "Portugal's tourism has experienced perpetual growth for the past fifty years. We view political uncertainty as prime opportunities to acquire assets, particularly when other investors, who may be new to this market or accustomed to different markets, hesitate and delay their capital deployment."

Hesitancy in the market paves the way for opportunistic investors to capitalise on the under-prepared or short-term portfolio operators' requirements to exit the market swiftly if they are unable to allow for a longer-term view. So, while the immediate impact of these political changes may seem disruptive, they also offer a unique window for astute investors to capitalise on Portugal's enduring strengths and future potential.

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