4 ms·

I'm not sure if it's the case in your location, but sometimes foreign buyers come in and buy properties they don't expect to inhabit (unless something goes real

I'm not sure if it's the case in your location, but sometimes foreign buyers come in and buy properties they don't expect to inhabit (unless something goes really bad in their country). Europe and the US have strong rule of law systems that prevent the state from just taking property. (The government charging you with a bogus criminal charge to justify taking their property in in their home country). It's also an asset that they can hold, even if it's not income generating, and even if it loses some value. (Because it's still better than most of the assets they have access to in their country). This is not always the case in every situation, but it's common. (Ed. as one person pointed out below, there is also a lot of money laundering that takes place. In that case, the property does not need to make any income).

newsclues 2y ago
It’s dirty money.
- phoehne 2y ago
  The vast majority is likely money laundering.
tcgv 2y ago
Portugal had a golden visa program that granted citzenship if you bought real state of at least 500k EUR. That drove home prices up signficantly in Lisbon, specailly units in that price range. Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments. [1] https://www.portugalhomes.com/golden-visa-portugal https://www.portugalhomes.com/golden-visa-portugal
- cpursley 2y ago
  The golden visas were issued in relatively small numbers, I doubt they affect price much vs all the short term rentals like Airbnb combined with explosive popularity of Portugal.
  - m000 2y ago
    The number of golden visas may be relatively small to affect prices on themselves (around 20.000 for Portugal in the last ~10y [1]). But I would bet that there is a connection between golden visas and the rise in the numbers of AirBnB properties. The golden visa is just a fast and convenient way to get a foothold in the country and do further investments. And what would these investments be? Probably AirBnBs... This is supported by data presented in [1]: >90% of golden visa holders acquired it via real estate investments. Now, would anyone pour their life's savings in a single property investment in a far away land? I would say no. So these golden visa holders are probably very well-off and they will continue "investing" in real estate, and expecting returns on their investment. Which translates to more AirBnBs. [1] https://getgoldenvisa.com/portugal-golden-visa-statistics#ftoc-all-time-portugal-golden-visa-statistics-2012-2023 https://getgoldenvisa.com/portugal-golden-visa-statistics#ft...
- jmrm 2y ago
  They also have to remove that "golden visa" in Spain due to the same problem. I wonder if Italy, Greece, and Malta will also remove/reform their law due to the same problem...
  - nickfromseattle 2y ago
    >They also have to remove that "golden visa" in Spain due to the same problem Found this article that indicates Golden Visas account for 14,500 of approximately 600,000 home sales per year in Spain. [0] [0] https://www.idealista.com/en/news/luxury-real-estate-in-spain/2024/04/19/816524-the-end-of-the-golden-visa-in-spain-will-have-a-limited-impact-according https://www.idealista.com/en/news/luxury-real-estate-in-spai...
andrewl-hn 2y ago
Blaming foreigners is the trick local politicians love to use, but - at least in Portugal - very few properties are foreign-owned. Instead, people are reluctant to rent properties out in general. Real estate agents struggle to convince owners to put their properties on the market in a first place. Usually a family member dies or moves abroad and their relatives simply keep the place unoccupied. Often to convince them to rent out you have to play a match-making game: you have to know both lenders and prospective tenants for years and be a guarantor of their good character. The more contacts the two parties have in common the better. Portuguese society is very socially conservative, often connections matter a lot more than money, and rent market is one area of the economy where it is very noticeable. To sidestep the whole "can we trust each other?" issue the owners may want to sell the property instead of dealing with tenants. Properties go to the market at inflated prices, because every house owner in the country hopes to sell to mythical "rich foreigners"* they hear so much on TV and online. Local buyers are essentially priced out of the market because the price-wage gap is simply too wide, one of the widest in the world. An average Portuguese family with two incomes can't afford a two-bedroom apartment even at a 30-year mortgage, even if we're talking about cities other than Lisbon or Porto. So, properties stay listed for sale for years and years, owners do not maintain them in hopes of making a sale "soon", and buildings slowly degrade. Eventually owners realize they need to invest a lot of money to keep the house presentable, the money they usually don't have, and they start to lower the price way down. As a result, the market is split in two big distinct categories: something livable at exorbitant prices and places that need a lot of investment to even start living there. Like a GP comment said you can walk on a street and more than half of places are clearly unoccupied, with many of them slowly turning into ruins. If you want to describe a Portuguese urban landscape in one word the word would be "decay". Meanwhile rent marked is under-served. All this is further worsened by the internal migration pressure. Lisbon, Porto and all towns on a narrow shore strip between the two are growing rapidly in past 30 years while the interior areas are getting deserted. Portuguese move to places where jobs are and developers can't meet the evergrowing demand. *I recall I saw a stat that foreigner buyers account for only about 0.2% of sales each year.
- phoehne 2y ago
  As I said, it's not always the case. But in some cities there are shuttered properties, in sometimes prime locations, that are held by non-residents. In some places, like London, it's literally a money laundering who's who. Carrying costs discourage just holding on to property. (I don't know if Portugal has taxes on real property). Increase the carrying costs and the incentive is to rent or sell. That being said, you can't do much about the location of the mountains or the sea.
pkaye 2y ago
This is what I could find about foreign buyers of residential property in the US for the last year. * $53.3B purchase volume * 84600 foreign buyers (1.8% of total) * Buyers are recent immigrants (<2 years) or non-immigrants * Top buyers are from China (13%), Mexico (11%), Canada (10%), India (7%) and Colombia (3%). https://cdn.nar.realtor//sites/default/files/documents/2023-international-transactions-in-us-residential-real-estate-08-01-2023.pdf https://cdn.nar.realtor//sites/default/files/documents/2023-...

newsclues 2y ago

It’s dirty money.

phoehne 2y ago
The vast majority is likely money laundering.

tcgv 2y ago

Portugal had a golden visa program that granted citzenship if you bought real state of at least 500k EUR. That drove home prices up signficantly in Lisbon, specailly units in that price range. Under new law, the Portuguese Golden Visa no longer provides Residency status through Real Estate investments. [1] https://www.portugalhomes.com/golden-visa-portugal https://www.portugalhomes.com/golden-visa-portugal

cpursley 2y ago
The golden visas were issued in relatively small numbers, I doubt they affect price much vs all the short term rentals like Airbnb combined with explosive popularity of Portugal.
- m000 2y ago
  The number of golden visas may be relatively small to affect prices on themselves (around 20.000 for Portugal in the last ~10y [1]). But I would bet that there is a connection between golden visas and the rise in the numbers of AirBnB properties. The golden visa is just a fast and convenient way to get a foothold in the country and do further investments. And what would these investments be? Probably AirBnBs... This is supported by data presented in [1]: >90% of golden visa holders acquired it via real estate investments. Now, would anyone pour their life's savings in a single property investment in a far away land? I would say no. So these golden visa holders are probably very well-off and they will continue "investing" in real estate, and expecting returns on their investment. Which translates to more AirBnBs. [1] https://getgoldenvisa.com/portugal-golden-visa-statistics#ftoc-all-time-portugal-golden-visa-statistics-2012-2023 https://getgoldenvisa.com/portugal-golden-visa-statistics#ft...
jmrm 2y ago
They also have to remove that "golden visa" in Spain due to the same problem. I wonder if Italy, Greece, and Malta will also remove/reform their law due to the same problem...
- nickfromseattle 2y ago
  >They also have to remove that "golden visa" in Spain due to the same problem Found this article that indicates Golden Visas account for 14,500 of approximately 600,000 home sales per year in Spain. [0] [0] https://www.idealista.com/en/news/luxury-real-estate-in-spain/2024/04/19/816524-the-end-of-the-golden-visa-in-spain-will-have-a-limited-impact-according https://www.idealista.com/en/news/luxury-real-estate-in-spai...

andrewl-hn 2y ago

Blaming foreigners is the trick local politicians love to use, but - at least in Portugal - very few properties are foreign-owned. Instead, people are reluctant to rent properties out in general. Real estate agents struggle to convince owners to put their properties on the market in a first place. Usually a family member dies or moves abroad and their relatives simply keep the place unoccupied. Often to convince them to rent out you have to play a match-making game: you have to know both lenders and prospective tenants for years and be a guarantor of their good character. The more contacts the two parties have in common the better. Portuguese society is very socially conservative, often connections matter a lot more than money, and rent market is one area of the economy where it is very noticeable. To sidestep the whole "can we trust each other?" issue the owners may want to sell the property instead of dealing with tenants. Properties go to the market at inflated prices, because every house owner in the country hopes to sell to mythical "rich foreigners"* they hear so much on TV and online. Local buyers are essentially priced out of the market because the price-wage gap is simply too wide, one of the widest in the world. An average Portuguese family with two incomes can't afford a two-bedroom apartment even at a 30-year mortgage, even if we're talking about cities other than Lisbon or Porto. So, properties stay listed for sale for years and years, owners do not maintain them in hopes of making a sale "soon", and buildings slowly degrade. Eventually owners realize they need to invest a lot of money to keep the house presentable, the money they usually don't have, and they start to lower the price way down. As a result, the market is split in two big distinct categories: something livable at exorbitant prices and places that need a lot of investment to even start living there. Like a GP comment said you can walk on a street and more than half of places are clearly unoccupied, with many of them slowly turning into ruins. If you want to describe a Portuguese urban landscape in one word the word would be "decay". Meanwhile rent marked is under-served. All this is further worsened by the internal migration pressure. Lisbon, Porto and all towns on a narrow shore strip between the two are growing rapidly in past 30 years while the interior areas are getting deserted. Portuguese move to places where jobs are and developers can't meet the evergrowing demand. *I recall I saw a stat that foreigner buyers account for only about 0.2% of sales each year.

phoehne 2y ago
As I said, it's not always the case. But in some cities there are shuttered properties, in sometimes prime locations, that are held by non-residents. In some places, like London, it's literally a money laundering who's who. Carrying costs discourage just holding on to property. (I don't know if Portugal has taxes on real property). Increase the carrying costs and the incentive is to rent or sell. That being said, you can't do much about the location of the mountains or the sea.

pkaye 2y ago

This is what I could find about foreign buyers of residential property in the US for the last year. * $53.3B purchase volume * 84600 foreign buyers (1.8% of total) * Buyers are recent immigrants (<2 years) or non-immigrants * Top buyers are from China (13%), Mexico (11%), Canada (10%), India (7%) and Colombia (3%). https://cdn.nar.realtor//sites/default/files/documents/2023-international-transactions-in-us-residential-real-estate-08-01-2023.pdf https://cdn.nar.realtor//sites/default/files/documents/2023-...