Best reasons to choose USA over Portugal

Best reasons to choose USA over Portugal

Portugal’s residence-by-investment scheme has been marketed prolifically in South Africa in the last two years. It is similar to the U.S. EB-5 program in some ways; and if you choose to invest in “the arts” or in “research activities”, the minimum investment amount is slightly lower than the U.S program. But investors need to be cautious about the Portugal program and the economic environment they’re investing in.

Portugal’s economy is currently rated 47th in the world according to the IMF – compared to the U.S. which is the world’s number one economy. For perspective, South Africa’s economy is ranked at 39th place, eight rungs higher than Portugal. Ask yourself: would you invest in the arts or in research activities in South Africa?

Property is another investment option in Portugal, but again, you need to consider the economic climate, Portugal’s property market, and the risks of capital loss. With Brexit looming, who knows what will happen to the EU in the next 5 years – which is the minimum investment term in Portugal’s visa program. Geopolitical events could have a dramatic impact on any investment in the country, and particularly property. It may also affect freedom of travel within the EU, which is one of this program’s main selling points.

Property assets can be risky

Some European programs are (wrongly) perceived as “less risky” by South Africans, because in many cases you invest directly in property. In other words, you buy and own real estate in the country you’re seeking to gain residency. This gives investors a (false) sense of security. While they are buying a physical asset, and buying a property is probably something they’ve probably done before, what investors aren’t always aware of is that the property markets in these countries are a lot more volatile than what they’re used to in South Africa. The Greek property market, for example, is down 45% since 2008. On top of this, there are ever-increasing property taxes levied. For example, in 2015, over 45,000 Greeks refused to accept the properties they inherited, due to the heavy taxes levied on properties.

And of course, if you’re looking to make a life overseas rather than simply gain a second passport, America is the obvious choice. It offers many of the best schools and universities in the world, it’s an easy cultural fit for South Africans, you gain access to the world’s biggest economy, and the lifestyle is safe and secure compared to South Africa.

Table of comparison: Portugal v USA