Portugal is the new paradise for rich Brazilians

Junho, 2019

Portugal started breaking taxes ten years ago to attract rich foreigners. From 2012, residence permits were offered to non-Europeans who owned homes of at least € 500.000. That attracted many Brazilians to the country. You can find the most Brazilians in the capital, Lisbon, in the south, and in Porto in the north, and they are already the largest foreign investors for residential real estate, even when compared with countries such as France, China, Angola, or the United States.

A smooth immigration scheme and a low tax rate of merely 20% is increasingly attracting rich foreigners to Portugal. Especially Brazilian millionaires, who used to go to Miami, the country is turning increasingly popular. 

The Brazilian entrepreneur Ricardo Bellino has a sharp eye for business. So, after having lived in Miami for more than ten years, he concluded that what led Brazilians to cross the Atlantic and move to Portugal was a thriving real estate market and favorable tax breaks. The 53-year-old multi-millionaire who made is fortune running a modeling agency, bought a house last year in an exclusive resort on a hill near Lisbon, where he's thinking to develop his next business plan. Bellino benefits in Portugal, the former colonial ruler of Brazil, of a flat tax for income tax of 20% and later has a chance of a tax-free pension. "This was a chance to be in a tax haven that is not a Caribbean island", says Bellino, whose grandfather came from Portugal. 'We are in Europe, in a country that in recent years has been going through a revival". Portugal applied the tax breaks ten years ago to attract rich foreigners. 

 

FRENCH BIGGEST BUYERS

After immigration was made more attractive, tourism and the real estate sector flourished in Portugal, impacting a significant economic growth in 2017, the biggest growth in almost twenty years. But for the Portuguese population, there were also negative consequences. The new demand pushed up house prices, so that they were priced out of the portuguese market. The French, who have a very high tax burden were the largest in 2017 in Portugal group of foreign home buyers with 29%.


HEATED REAL ESTATE MARKET

Housing prices in Lisbon have almost doubled in the last six years, and the number of total foreign investment in home ownership has increased significantly since just last year, according to figures from the Portuguese broker's association. The Brazilians stood with 19% of total foreign investment, followed by the British with 11% and Chinese buyers with 9%. The Brazilians, who speak Portuguese, are walking quickly to catch up on the French, and are already the largest foreign investors in residential real estate. "Everywhere they buy houses," says Luis Lima, Head of the Lisbon Real Estate Agency. "These Brazilians are totally different of those who have come to Portugal in the past. They belong to the higher social class.'


MELANCHOLIC NATION

Economic prosperity and adversity have always determined both sides on immigration between Brazil and Portugal, but the last generations of rich Brazilians clearly had preference for the young, hip, international Miami for years. They rated Portugal as a melancholic nation, who wanted too much back from it glorious past. That image can be seen again in the love of the Portuguese for the fado, the songs about loss and sorrow, a difference of day and night with the livelier Brazilian samba, with its African influences. "My first visit to Portugal was in the seventies and I noticed how much poverty there was", says Claudio Madureira (70), a Brazilian who retired last year, after his construction company that had moved to Portugal ceased. "When I thought of Portugal, it was just as if I were watching images on a black and white TV. "

That all started to change when Portugal was able to complete the emergency aid program in 2014 and a boom in tourism and real estate transactions totally changed the cities. There came boutique hotels, restaurants with Michelin stars, luxury apartments and stores aimed at foreigners. The tax breaks and the image of Portugal as a safe country (it stood in fourth place in the Global Peace Index of 2018) were the cherry on top of the cake for many Brazilians. In almost no country would you find more murders than in Brazil. According to the Brazilian public safety institute, an independent organization providing crime data, there were an average of 175 fatalities per day in 2017. Falling since 2018 the figures for violent crimes, a development who had already been deployed for the election of President Jair Bolsonaro, although that is not him has prevented claiming the honor for this. Nor has it convinced many Brazilians to return. "I no longer hope it will ever be better will be in Brazil,", says Madureira, who on working days now with other Brazilian expats entertained on the tennis court in Cascais, a seaside resort near Lisbon.

The richest woman in Portugal is a Brazilian, say residents in Chiado, one of the most expensive areas of Lisbon. They mean that on their neighbor Regina de Camargo
Dias, who is building it together with two sisters cement company Camargo Correa SA. She belongs to the group of rich Brazilians who buy houses in the Portuguese capital Lisbon, where the price per square meter can increase up to € 10,000. Many locals complain that they can't afford any houses anymore, because it is completely aimed at attracting foreigners. The median house price rose by 2018 23.5%, up to an average price of € 3010 per square meters, while the average salary of Portuguese workers according to but the national statistical office increased only by 3.7% to € 888.

"A sad development," says Isabel Sa da Bandeira, who leads an in Lisbon-based organization with the name "People live here," which the authorities adhere to recalls that there are still ordinary people in the capital city. "The prices are out of control. Even people with a job can no longer pay a house in the city". Yet, first-class real estate in Lisbon is still much cheaper than in cities such as London and New York. A three-room apartment from 280 m2 in one of the most exclusive buildings in Lisbon, Sky Flats Castilho 203, is on the website of Lince Real Estate for $ 5.4 million. A similar property at Park Avenue in New York is possible, based on figures from Sotheby’s International Realty, as much as $ 24.8 million to yield. Minister of Economic Affairs Pedro Siza Vieira stated in an interview that affordable housing is lacking in the center of some Portuguese cities. "We know that this is a global phenomenon, rising prices in city centers, and that this leads to social problems", he said.

 

MEETING WITH TRUMP

Ricardo Bellino claims to have convinced Donald Trump in three minutes that he had to invest in a half-billion-dollar golf course São Paulo, back in 2003. In the end, it was never built. The entrepreneur sees Portugal as a country with lots of options. Bellino bought his house in Key Biscayne in Florida at the start of the financial crisis in 2007. The Brazilian coin (real) was strong then and the dollar was weak. Now, he has invested in multiple sectors in Portugal, including new companies, education and real estate. "If there is a crisis, I usually see business opportunities", says Bellino, who met with Trump in a book about the art of pitching, which had the title "You Have 3 Minutes!", he also states that "I am a true entrepreneur, so when everyone cries, I prefer to sell tissues."

 

Source: Het Financieele Dagblad (original article in Dutch)

Translation: Carolina Balhico
Copyright: Bloomberg