Golden visas singe hasty investors

Potential homebuyers visit a housing expo in Nanjing, Jiangsu province, Sept 19, 2013.[Photo/IC]

Caution advocated on real estate purchases in Portugal as Chinese buyers burn their fingers, reports 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 one-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 1 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.

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 news 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.