AMANDA VISSER: Several factors have been driving South Africans to look for greener pastures. Changes to Portugal’s immigration requirements and the inability to access retirement funds to finance the move have complicated immigration to that country. Portugal has been a favourite destination through the Golden Visa. However, imminent changes affecting the Golden Visa now require a Plan B.
I’m Amanda Visser, and today we are joined by Stuart Ferguson, director of 12 Star Capital to run us through some of the salient points of securing a [move to] an alternative destination. Stuart, perhaps you could start off by explaining to us what the Golden Visa is all about.
STUART FERGUSON: Yes. Firstly, Portugal is really a hot subject at the moment. South Africans resonate with Portugal, and certainly there are a number of very large South African property developers that are exceptionally active in Portugal.
A little bit about the Golden Visa programme. The Golden Visa was launched in 2012 as a programme to lure foreign investors who are seeking alternative residency in Portugal. An interesting fact is that since its inception the programme has raised over €6 billion directly into Portugal through those that are seeking an alternative residency.
I think one of the things that makes the Golden Visa quite unique and very attractive to South Africans is the fact that you can include children and parents [if] you can demonstrate that they are dependent, and [you have] the ability to work and live in Portugal. I think the other unique thing related to the Golden Visa programme is that this residency does lead to citizenship. The Golden Visa also allows South Africans to freely travel through the EU [European Union], which is a major benefit for those of us on the ‘Green Mamba’ [South African] passport.
AMANDA VISSER: What are the proposed changes to the visa requirements?
STUART FERGUSON: Amanda, as you know, these residency programmes do change. Certainly, the EU, which is a regulatory body, monitors these programmes quite closely. One of the reasons why we are very attracted to and enjoy the Portuguese Golden Visa programme is because it is so regulated.
Some of the proposed changes which come into play in January next year will be that foreign capital needs to be redirected to more outlying areas to stimulate investments in infrastructure.
The attempt is to encourage investment outside hotspots such as Lisbon, Porto, the Algarve, and the Silver Coast. Investor capital for those that are investing into direct real estate will be redirected to Portugal’s less densely populated interior, in places like the Azores and Madeira, which are still fantastic locations.
The other reason for this change, specifically from the Portuguese authorities, is that they would like to ensure that they don’t fall foul of regulatory requirements that are monitored by the European Commission. So yes, those are the proposed changes.
AMANDA VISSER: Could you explain a little how those changes will affect South Africans wanting to settle in Portugal?
STUART FERGUSON: Firstly, those who are investing directly into property ownership as a mechanism to facilitate the Golden Visa will no longer have the ability to invest in metropole areas like Lisbon and Porto. They will be forced to invest in property ownership structures that are in more remote areas.
For those who are investing through a fund structure, which is the mechanism that we focus on, the investment threshold would increase from €350 000 to €500 000. So, there’s a great call to action for those wanting to take advantage of the €350 000 entry level through a private equity fund.
AMANDA VISSER: Stuart, perhaps you could explain to us how this fund is structured?
STUART FERGUSON: Amanda, we’ve been trying to identify a great property investment that would resonate with South Africans. It was through doing a number of due diligences on the ground in Portugal that our fund manager of choice, Fundbox, suggested that we [look to] EQTY CAPITAL.
EQTY CAPITAL is the mechanism through which South Africans can invest in Portugal.
As I mentioned, the fund managers are Fundbox, and the custodian bank is Banco Invest. And then obviously from a Fundbox aspect, this is a very highly regulated investment strategy for South Africans.
AMANDA VISSER: Your recommendations, given the current environment with Covid-19 and these changes to the immigration requirements?
STUART FERGUSON: Firstly Amanda, Covid has generated a lot of interest. Certainly, what has transpired over the past [few] weeks in South Africa has spurred a lot of interest in Portugal, a Plan B, and a rand hedge. But the biggest issue with Covid is that we haven’t had the ability to travel, so trying to identify a property has become very difficult. At the moment investing through a fund mechanism [that is] highly regulated [with] great returns allows an opportunity for people to make a firm decision prior to the January changes.
AMANDA VISSER: If you say that there are changes coming in January next year, what is it that South Africans need to do now to still be able to catch the old rules?
STUART FERGUSON: Amanda, it is quite a lengthy process to activate the Golden Visa. The first step would be for us to engage with an immigration firm on the ground in Portugal. We use a company called Dixcart, which then reaches out to the fund manager. At the same time, we begin with the opening up of a Portuguese bank account. The investor needs to be registered with the local tax authorities, and obviously, there is the subscription component.
From a call-to-action aspect, ideally, we would like to see South Africans subscribed to the fund by November to ensure that they can meet the January deadline.
AMANDA VISSER: Thank you. That was Stuart Ferguson, director of 12 Star Capital.
Brought to you by 12 Star Capital.
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