The Spanish government’s decision to abolish the residency by investment programme has prompted debate among investors and real estate experts. The initiative, approved on 14 November and set to take effect at the end of March 2025, aims to alleviate pressure on the housing market. However, the key question remains: how will the elimination of the Golden Visa impact the Spanish real estate market, and what implications will it have for foreign investors?
Since its launch in 2013, the Golden Visa has been an attractive proposition for foreign investment in real estate, allowing non-EU citizens to obtain residence visas for real estate investment through the purchase of high-value properties in Spain. The recent decision of the government, led by Pedro Sánchez, not only affects this programme, but also includes a reform of the Entrepreneurs Law, impacting other modalities of the residence permit for investment.
This article from Quadratia examines the reasons, impacts and alternative investment options for those interested in the Spanish real estate market. It is essential reading for anyone considering investment in this sector.
What is the Golden Visa in Spain?
The Golden Visa is a residence permit in Spain designed for non-EU citizens who wish to reside and work in the country without a mandatory minimum annual stay. In order to obtain such residence, it is necessary to make an investment in Spain, traditionally in real estate, for a minimum of €500,000.
The visa, enacted in 2013 under Law 14/2013, offers access to the Schengen area and is ideal for those seeking freedom of movement in the country. Furthermore, this residence visa encourages foreign investment and development in Spain, providing an economic boost from outside the EU and making it easier for investors to legally reside in Spanish territory.
The foreign investor’s residence permit is initially valid for 2 years and can be renewed after its expiry for periods of 5 years, provided that the investor maintains the investment.
Isabel Soriano, Sales and Marketing Office Coordinator at Quadratia
Current status of the Golden Visa
In order to qualify for the Golden Visa, applicants are required to meet one of the following investment criteria:
- Financial investment: A financial investment of at least €2 million in Spanish government bonds, or €1 million in shares in Spanish companies, shares in companies or deposits in Spanish banks is required.
- Real estate investment: The applicant must invest in real estate in Spain with a minimum value of €500,000.
- Entrepreneurial project: the development of a business project of general interest in Spain, which generates employment, has a socio-economic impact or contributes to technological innovation.
Why has the government decided to eliminate the Golden Visa in the real estate sector?
The Spanish government has therefore decided to abolish the Golden Visa in order to alleviate tensions in the housing market.
This decision represents a partial modification of the programme, without abolishing it completely, and responds to the growing demand for high-value properties by foreign investors, especially in cities such as Madrid, Barcelona and Alicante. This has contributed to rising prices in the real estate sector, making access to housing more difficult for local residents.
Moreover, in this way, Spain joins the trend observed in other European countries, such as Portugal and Ireland, which have also limited or eliminated similar programmes to promote affordable housing and curb speculation in the real estate sector.
The reform will not affect permits already granted and maintains other Golden Visa options, such as financial investments or investments in projects of general interest.
Entry into force of the abolition of the Golden Visa for real estate investment
It is anticipated that the Golden Visa residence regime will cease to exist by the end of March 2025. On 14 November, Congress approved the repeal of articles 63, 64, 65, 66 and 67 of Law 14/2013, of 27 September, on support for entrepreneurs and their internationalisation. The amendment removes the option of obtaining the Golden Visa through real estate investments in Spain. The final text of the reform is expected to be published in the Official State Gazette before 31 December 2024.
Given the advanced stage of the legislative process, those interested in applying for the Golden Visa for real estate are advised to start the process as soon as possible. The approval of this derogation restricts access to this form of residency, and with the entry into force scheduled for March 2025, prompt action is essential to ensure that permission is obtained before the regime is abolished.
Do you want to invest in real estate in Spain? Don’t miss this previous Quadratia article on the requirements and steps to buy a house in Spain as a foreigner.
Isabel Soriano, Sales and Marketing Office Coordinator at Quadratia
Impact of the elimination of the Golden Visa for real estate investors in Spain and its effect on the luxury market
The imminent elimination of the Golden Visa could result in a temporary surge in demand, driven by investors seeking to take advantage of this residency route before it is discontinued. Indeed, the Spanish property market remains highly attractive to international buyers due to its status as a luxury destination and holiday home, particularly in areas along the Mediterranean coast such as the Costa Blanca, Costa del Sol and Costa Cálida.
However, according to Idealista, Golden Visas granted between 2013 and 2022 represent only 0.1% of the 4.5 million homes sold in that period. Furthermore, in 2022 only 136 visas were granted, representing 0.14% of sales to non-EU foreigners. This indicates that the Golden Visa has had a minimal effect on the overall volume of transactions, making its removal an unlikely catalyst for significant market shifts.
Alternative investment avenues to obtain the Golden Visa in Spain
Don’t worry, even if the Golden Visa real estate scheme is abolished, investors can still benefit from this programme through the following alternative options:
- Investment in financial assets: Requires investing a minimum amount of EUR 1 million, and can be carried out through:
- Deposit in a bank account in Spain.
- Purchase of shares or participations in actively operating Spanish companies.
- Investment in closed-end or venture capital funds incorporated in Spain.
- Investment in Spanish public debt: This involves a minimum investment of 2 million euros in Spanish public debt securities, which must be held for at least 5 years.
- Business project of general interest: To develop a business project in Spain that meets at least one of the following requirements:
- Job creation.
- Positive socio-economic impact in the area of operation.
- Significant contribution to scientific or technological innovation in Spain.
Conclusions
In conclusion, investing in real estate in Spain remains an attractive opportunity, especially if you have the support of experts who understand the local market and regulations.
Quadratia, the leading developer of residential projects along the Mediterranean coast offers you personalised advice aimed not only at meeting the legal and tax requirements of the Spanish market, but also at optimising every step of the investment process of your future residence in one of the most desirable areas of Europe.
Get closer and closer to the dream of investing in new homes in Spain!
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