(Bloomberg) — Billboards in Chinese at Lisbon’s international airport peddling luxury properties leave little doubt about who is buying real estate in Portugal.
While the ads offer a chance at securing a so-called golden visa to live in Portugal in exchange for property investments of at least 500,000 euros ($559,000), they leave out the golden rule of such purchases: never rush into a deal.
The haste with which some Chinese buyers have acquired their piece of Portugal has left them feeling cheated once they realize they might have struck better deals. Some may even have been victims of middlemen who charge commissions of as much as a quarter of the value of the transaction.
“Many Chinese land in Portugal for the first time, don’t speak the language and buy a home in a matter of days,” said Y Ping Chow, head of the Chinese League in Portugal, a Lisbon-based group that promotes the Chinese community. “Some of these investors got burned.”
Portugal can’t afford to leave a sour taste in the mouth of Chinese investors. The golden-visa program, which began in late 2012 while the country, like much of Europe, was in the throes of the financial crisis, has raked in more than one billion euros in much-needed investment, mainly from Chinese property buyers, according to the country’s foreign ministry.
The Chinese accounted for more than 80 percent of the 1,526 resident permits issued under the program last year, according to the ministry. Home prices in Portugal rose 1.2 percent in 2014 after seven straight years of declines, Confidencial Imobiliario, a company that collects property-market data, said in an e-mail today.
To ensure foreign investors continue buying property in the country through the golden visa program, the government announced plans on Feb. 23 to tighten controls over the issuance of resident permits, including a closer monitoring of real estate prices. That came after a probe into allegations of corruption, influence peddling and money laundering linked to the golden visas led to 11 detentions.
“The aim is to improve this program,” Vice Premier Paulo Portas said at a press conference in Lisbon. “There are 13 other EU countries with similar investor programs and it doesn’t seem wise to give up this program to the benefit of others.”
Keeping the program going will mean convincing potential property buyers that they won’t meet the fate of Hua Guiping.
Hua, 47, flew from Shanghai to Lisbon in 2013. In less than a week after her arrival, she agreed to buy a home for 500,000 euros before moving to Portugal with her husband and daughter.
Bracketed by an interpreter on one side and a real estate agent on the other, Hua visited dozens of homes in two days before agreeing to buy a house at The Arrabida Resort and Golf Academy, about 40 kilometers (25 miles) south of Lisbon.
“While none of the houses that I visited pleased me, the seller insisted the price was very low and that in two years it would rise to one million euros,” Hua said in an e-mailed statement to Bloomberg News. “I agreed to buy the house and returned to China feeling happy because I thought I had made an excellent deal.”
A few months later, while browsing the Internet, Hua learned that some of the homes in the same resort were on sale online for less than half the price she had paid.
“I saw that houses in the same area were valued at 210,000 euros to 250,000 euros while my home was sold for more than twice that value,” said Hua. “I’m truly upset by all this.”
Several online real estate listings show prices for similar three-bedroom properties in the same resort ranging from 220,000 euros to 515,000 euros.
Pelicano-Investimento Imobiliario SA, the company that owned the house Hua agreed to buy, denies that it sold the property at above market prices.