Can Golden Visa Investment Funds solve the housing crisis in Spain and Portugal? Research expert weighs in

Why this story matters: Historically, the Golden Visa has been blamed for Portugal and Spain's housing crisis. But the data tells a different story. We spoke to our Global Intelligence Unit's Research Lead, Dr Laura Madrid, about the real culprits behind the housing crisis and how real-estate-focused investment funds could be the solution the Portuguese and Spanish authorities didn't know they needed.

Portugal is an easy draw for anyone looking to move to this sundrenched country—warm weather, tasty cuisine, low cost of living, and, until recently, a relatively straightforward road to residency. But golden visas have been in the media limelight for a while, with not all coverage positive. In particular, Portuguese political parties have been debating over their role in the housing crisis.   

Portugal has already revamped its Golden Visa program, banning property investments as a route to residency since 2023. Spain recently announced it would scrap its Golden Visa in a bid to make housing affordable again. However, the property website Idealista reports that the scheme had a minimal impact on Spain's housing shortage. Will Spain's bold move and Portugal's Golden Visa revisions fix the housing market?  

 To find out, we turned to our Global Intelligence Unit's Research Lead, Laura Madrid Sartoretto, PhD . After reviewing publicly available data and collaborating with an Investment Funds expert, Lourenço Alvares, she concluded in her latest brief that foreign investment, including Golden Visas, hasn't driven up housing prices in Spain or Portugal. In fact, these investments have had little to no impact on property inflation.  

Beyond the data, Laura came up with concrete steps Portugal and Spain can take to stem the housing bleed. It all begins with using real estate investment funds.  

What's really behind the housing crisis?  

Golden Visa programs in Spain and Portugal were originally introduced to boost the housing market after the 2008 financial crash. Since then, critics have blamed these programs for driving up prices. But research from the Global Intelligence Unit tells a different story.  

One of the main drivers of the housing crisis is the sharp drop in construction after the 2008 crash, which led to a notable backlog of homes. Demand has increased since 2015, but new builds need to catch up. In 2022, just 11% of the 170,000 properties sold in Portugal and Spain were newly built.  

 While foreign direct investment, including through Golden Visas, has added to demand, its impact on prices is often overstated. In 2022, Golden Visa-related transactions made up just 0.6% of all property sales and 1.6% of total transaction value in both countries. The data is clear: these Golden Visa investments have only played a minor role in driving real estate inflation.  

Gonçalo Peixoto , Goldcrest Real Estate 's head of unit, has his own view about what is hiking up the property prices in Portugal.

"Real estate golden visa transactions account for less than 2% of all real estate transactions over the ten years the program was active. The challenge in balancing property prices has to do with supply constraints. With a healthy property supply, the market would naturally adjust. But creating that supply is hard. Developers face long, complex city approval processes, often taking more than four years to get permits approved. These delays increase development costs, which then trickle down to final prices."

Larger economic forces loom. According to Eurostat, housing prices in the EU climbed 9.3% from 2021 to 2022 due to inflation, post-pandemic recovery, supply chain disruptions, international conflicts, and rising construction costs. On top of that, COVID-19 shifted housing preferences, with families looking for larger homes to accommodate remote work and evolving lifestyle needs. This has only strained an already tight market. In short, the primary causes of rising prices are supply shortages and global economic disruptions—not foreign investment.  

Could real estate-focused funds be the answer?  

"There isn't a magic wand for the issue of housing," Mayor of Porto, Rui Moreira said. "We have to find fair measures and various medicines."   

Golden Visa programs respond to societal, economic, and political trends. They are ever-evolving, and governments have restructured the flow of foreign direct investment to keep up with these changes and redirect capital to vital areas of the economy.   

"Although Spain plans to phase out the Golden Visa, especially for real estate, our analysis shows this decision will have little to no impact on housing prices," says Laura Madrid, Lead Researcher at the Global Intelligence Unit."

These programs are often scapegoated for problems that aren't backed by data. Spain should keep real estate as an option in the Golden Visa program but redirect that investment toward affordable, green housing and the rehabilitation of existing housing stock that doesn't meet current EU green standards. This would help both the housing crisis and Spain's sustainability goals."  

 Another key policy recommendation for Spain is to pump growth in less developed regions, as other countries like Greece have done. To make the most of investment funds, the government should lower the minimum investment to €500,000 and allow investors to diversify their portfolios, especially with real estate-focused funds. By directing these funds into affordable and sustainable housing projects, Spain can attract foreign capital while tackling both housing and environmental challenges.  

 What about Portugal?  

In October 2023, Portugal officially removed real estate investment as an option under its Golden Visa program, part of broader housing reforms, including the "Mais Habitação" (More Housing) bill. The aim was to slow down property prices and ease shortages in urban areas like Lisbon and Porto.  

 However, Golden Visa investments have had surprisingly little impact on the housing market, even in these cities. In trying to curb the housing crisis, Portugal missed an opportunity to direct foreign capital into building new housing units.  

 It's not too late for the newly elected Portuguese government to rethink its strategy. Instead of abolishing real estate investment from the Golden Visa, they could focus on redirecting these investments into affordable and green housing projects.  

 The new administration needs a more balanced approach that allows real estate investment and supports real estate-focused funds to build and rehabilitate affordable housing. This would help control inflation, ease demand, and align with sustainability goals, much like Spain's proposed strategy. By leveraging public-private partnerships and EU funds, Portugal can still use foreign investment as a powerful tool to address its housing crisis and stabilize the market.  

An opportunity to shape the future of investment  

The housing crisis in Spain and Portugal is a nuanced issue with roots in construction slowdowns, economic disruptions, and shifting lifestyle needs. Golden Visa programs, often blamed for the crisis, have played only a minor role. The real opportunity lies in leveraging investment funds to create sustainable, affordable housing that meets both economic and environmental goals.  

 Want to dive deeper into the data and solutions our team proposes? Read our full briefing for an in-depth look at how smart investments can reshape the housing market.