The Council of Ministers has approved the elimination of the so-called golden visa for non-EU foreigners who invest more than 500,000 euros in housing, just one day after the President of the Government, Pedro Sánchez, announced the decision. The decision is a sign that foreign investment is not welcome in Spain, but we are going to look at some numbers to consider the impact of this decision and what it means for the real estate market in Spain, especially in the “capitals” such as Madrid, Valencia, Barcelona, Malaga and the Balearic Islands, among the most important. The ‘golden visa’ was originally introduced as a way to attract international clients from outside the EU and the Schengen Area to Spain. However, the actual number of transactions involving this ‘golden visa’ scheme has been very low since it came into force in 2013. “The vast majority of international customer transactions in Spain are from within the European Union or do not involve the ‘golden visa’ scheme. Therefore, the actual impact on prices and transactions has been and will be extremely limited. It is estimated that in percentage, the purchase and sale transactions of clients who bought a property to obtain the “golden visa” represent between 1% and 3% of the total. According to data provided by the Government, since 2013 nearly 14,500 golden visas have been issued, which contrasts with the approximately 600,000 homes sold each year throughout Spain without depending on these visas. All, or almost, experts in the sector are convinced that the withdrawal of the ‘golden visa’ will not have any impact on the price of luxury housing, since it will continue to rise at a strong rate due to a demand that is far from cooling. However, it will have consequences in terms of economic activity on a limited scale. They also tod@s or almost agree that this measure does not serve to “stop” real estate speculation or will be of help to Spanish families who want to access a home and cannot considering that they are different markets and totally independent: “The price of housing is the apartment that is sold at 4,000 euros or 3,000 euros or 5,000 euros per square meter in Madrid or wherever, for the average Spaniard, who is not at all affected by the Golden Visa. Because the Golden Visa client is not the client of the average Spaniard or even the Spaniard who buys an affordable house and cannot afford it. Because they are obviously different sectors of the market,” according to Enrique López Granados, President of Caledonian.
The measure was announced on Monday by Prime Minister Pedro Sánchez, but the Minister of Housing has been in charge of explaining why it is being taken now. The main explanation lies in the increase in the application for this type of ‘visa’ in the last two years, as “they have doubled”, he warned, and the weight they have in some areas.
“In Marbella, purchases by Golden Visa account for 7.1%, in Barcelona 5.3% and reach 10% in some municipalities of the Balearic Islands. These transactions stress the market and increase the price of housing. With the government’s decision we are going to paralyze this type of speculation,” he stressed.
This justification has been questioned since yesterday by different agents in the sector, who consider that given the reduced weight that Golden Visas have on the total number of home sales that take place in the country, it is not likely that they are responsible for the tension in prices.
Rodriguez explained that out of every hundred Golden Visas granted in the last decade, 94% are for real estate actions.
The increase in Golden Visa applications in 2022 and 2023 has been driven not only by demand from the US, China and Russia, but also by the UK’s exit from the European Union.
We obviously do not believe that it is a sufficient measure or that it helps to lower prices, perhaps it has been a “necessary” measure in a country that is developing economically to be able to compete with the locomotives of Europe and with the United Kingdom, we remember that the Spanish PIL for the first time exceeded the PIL of a country like Italy, and with cities among the most attractive in Europe for foreigners even without Golden Visas.
