18 | PORTUGAL WORDS | John Howell Portugal has a plan
Portugal was one of the fi rst casualties of the global fi nancial crisis. The government, working closely with the unions and other key players, have since been working very hard to come up with a credible plan to move Portugal – in particular, its real estate industry – out of the crisis and forward. Have they succeeded?
FEATURE
www.opp-connect.com | APRIL 2013
O
n the face of it, Portugal seems to be pretty average when you look at its tourist industry.
9% of its GDP comes from tourism (the world average is 9%) and 8% of its people work in the tourist sector. Between them, they produce €8.6 billion for the Portuguese economy. They want to do more – much more – and they want the real estate industry to lead the way. They are also prepared to give the industry some support in order to encourage its growth. They have identifi ed fi ve key objectives along the road to a bigger and improved tourist sector:
The plan
1. Promote Portugal 2. Decrease seasonality 3. Sustain air capacity 4. Support other businesses 5. Increase sales
So far so good, but these same headings could apply to almost every tourist economy. How do they propose to turn them into action and why do they think they will succeed in growing their tourist industry in the face of worldwide competition? They have identifi ed property
sales of 100,000 per year in Southern Europe – of which Portugal only takes 4%. They want to increase this to 10%. Overwhelmingly, their most important
market is the British market. They are hopeful of increasing sales to this market – hence the UK was the fi rst stop on their tour of Europe – but they also wish to become more successful in other markets. Just as importantly, with a view to their objective of decreasing seasonality – they want to focus on people who will be staying in Portugal for all or a large part of the year. They bring more to the economy, they support more local businesses and they provide stability. They are taking a step by step approach to the task. The fi rst step – already taken
but now being fi ne-tuned – was the creation of the so called “Golden Visa” to encourage residency in Portugal based on investment in the country. Invest over €500,000 in a property or create jobs in the country by other investments and you will be able to live in Portugal, wherever in the world you may come from. Obviously, there is a bit more to it than that but that is the basic idea. This policy is specifi cally aimed at people from China, Russia and the Middle East looking to set up home in Europe. Of course, many other countries
have already been down this route. What are the Portuguese going to do about the two big worries: limitation of the size of the visa programme and price competition from other countries. Alvaro Santos Pereira, the
Portuguese Minister of the Economy
& Employment, was very blunt about both of these problems. His background is as an economist and university teacher and his direct approach and clarity of communication was a very pleasant surprise after dealing with the politicians in other countries who have been trying to grapple with the same issues. You
“Portugal has a perfect climate. A stable society. A safe environment and competitive prices”
get the feeling that if anyone can make this happen, he can. He is very clear: “There are no quotas on the number of visas available to particular nationalities and there are no plans to introduce any quotas. Nor is there any overall limit on the number of visas that can be made available”. He is equally direct on the issue of price competition: “For the people we want to attract, the choice of where to live is not governed by price. Portugal has so much to offer. A perfect climate. A stable society. A safe environment and competitive prices.” The second key component of the
plan is the introduction of simple and low taxes – a 20% fl at rate – for foreign people wanting to settle in Portugal. The third is communicating what
is on offer to the people concerned. With this in mind the Portuguese have established a comprehensive website:
www.livinginportugal.com. Here, buyers and potential buyers can see – in many languages – what is involved in moving to the country. Diogo Gaspar Ferreira, CEO of the
highly successful Portuguese resort Val do Lobo and President of the Portuguese Association of Resorts (with which the government is working closely on this project) recognises the importance of the British market but also places great faith in the Eastern European markets: “less than 1% of millionaires in Eastern Europe have homes in Southern Europe. This will change. They will be attracted to Portugal by the quality of life”. The effect of success would be dramatic. “An extra 5,000 sales per year” says Diorgo “at an average of $200,000 per sale not only produces an immediate €1 billion but it also increases the annual spend by those people when they visit the country. The 10 years from 2015 will be as good to our industry as any in our history”. These ambitious plans will be
diffi cult to deliver in a world still in economic crisis and against stiff worldwide competition but the fact that the government is joining with the industry to create a coherent plan and to promote real estate sales may give them the edge. Everything depends on how effectively the plan is delivered
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