Golden Visa Programs, Once a Boon, Lose Their Luster

When Ana Jimena Barba, a young doctor, began working at a hospital in Madrid last year, she moved in with her parents half an hour outside the city until she could save enough to buy her own home. But when she started looking at houses in the same village, almost everything was priced at more than 500,000 euros.

The amount — nearly 20 times more than the average annual salary in Spain — happens to correspond to the cost of the country’s “golden visa,” a program that offers residency to wealthy foreigners who buy real estate there. After a decade, the program has reeled in billions of euros in investments, but it has also helped fuel a wrenching housing crisis for its own citizens.

“There’s nothing I can afford,” said Dr. Barba, an allergist who has been working 100 hours overtime every month to save up a nest egg. “If foreigners inflate the prices for those of us who live here, it’s an injustice,” she said.

Faced with growing pressure to address its housing crunch, Spain said this month that it would scrap its golden visas, the latest in a wider withdrawal from the program by governments around Europe.

Half a dozen eurozone countries offered the visas at the height of Europe’s debt crisis in 2012 to help plug gaping budget deficits. Countries that needed international bailouts — Spain, Ireland, Portugal and Greece among them — were especially desperate for cash to repay creditors, and saw a path to bring in investors while reviving their moribund real estate markets.

Countries reaped a windfall: Spain alone has issued 14,576 visas linked to wealthy buyers making real estate investments of more than €500,000. But the prices that they can afford are squeezing people like Dr. Barba out of a market that had already been highly inflated by the rise of Airbnb and the draw of Wall Street investors.

“Access to housing needs to be a right instead of a speculative business,” Pedro Sánchez, Spain’s prime minister, said in a speech this month as he announced the end of the country’s golden visa program. “Major cities are facing highly stressed markets, and it’s almost impossible to find decent housing for those who already live, work and pay their taxes.”

The visas make it easy for people outside the European Union to buy the right to temporary residency, sometimes without having to live in the country. Investors from China, Russia and the Middle East flocked to buy real estate through them.

In recent years, British nationals have followed suit in the wake of Brexit, snapping up homes in Greece, Portugal and Spain, joined by an increasing number of Americans looking to enjoy a lifestyle they can’t afford in major U.S. cities.

But golden visa programs are now being phased out or shut down around Europe as governments seek to undo the damage to the housing market. And after Russia’s invasion of Ukraine, E.U. officials urged governments to end them, warning they could be used for money laundering, tax evasion and even organized crime.

Portugal, which has reaped more than €5.8 billion in investment from the visas, modified its program in October to remove real estate as an investment to reduce speculative buying and cool an overheated housing market. An influx of foreigners has displaced thousands of low-income Portuguese citizens from homes in cities like Lisbon.

The government in Lisbon is trying to fix the affordable housing problem with new rules that would require landlords to rent empty flats to families, capping rents and converting some commercial real estate to housing.

Ireland shut down its program last year, in part to address concerns that Russian nationals were laundering money through it.

Greece, one of the last countries in Europe to offer a golden visa, is raising its foreign investment threshold to €800,000 from €500,000 in the Athens area and on popular islands including Mykonos and Santorini. The country’s prime minister, Kyriakos Mitsotakis, acknowledged severe housing shortages and pressure on rental markets, especially around Athens, but he said the government still wanted to draw investors. Greece raised €4.3 billion in investment from the visas from 2021 to 2023 alone.

A report released by the Institute of Labor Economics in March said the visa programs had helped spur economic development in countries offering them. But governments need to strike “a delicate balance between reaping economic benefits and safeguarding against potential risks,” including money laundering and rampant gentrification, the report said.

The pullback is coming as a broader housing crisis grips Europe, after years in which its real estate markets have undergone a profound metamorphosis that has increasingly pushed out modest-income workers, including doctors, teachers and police officers.

Gentrification has spread throughout European cities for decades, but the rise of Airbnb and other short-term rental providers has accelerated the affordability crisis. That was especially the case in countries affected by Europe’s debt crisis, where property owners discovered they could make more by renting to tourists than to locals whose finances had been squeezed by austerity programs.

Golden visa programs compounded the strain. In Greece, which initially granted foreigners a five-year residency visa if they invested €250,000, many apartment and home listings around Athens and on breezy Greek islands suddenly shot up from bargain-basement prices to €250,000, well out of reach for most Greeks.

Laura McDowell, an agent at the Athens-based Mobilia real estate agency, said that short-term rentals had made rents unaffordable in city centers, and the problem was worsened when investors from numerous countries converted homes purchased through golden visa programs to vacation rentals, further squeezing the supply of affordable housing.

The scheme lured Chinese nationals in particular, with many flying to Athens carrying suitcases loaded with cash. Chinese investment companies also bought buildings in low-income neighborhoods and areas with student housing, renovating apartments and reselling them to visa seekers. Today, entire apartment blocks even in once undesirable zones in and around Athens are owned largely by foreigners.

“Prices driven up by golden visas haven’t come down,” Ms. McDowell said. “Greeks have been priced out.”

In Spain, Chinese investors made up nearly half of visa seekers, followed by Russians. Low interest rates set by the European Central Bank compounded the problem in recent years by drawing more real estate investors outside the visa program, said Ernest Urtasun, Spain’s culture minister.

The Spanish government plans to construct 40,000 social housing units for people with limited resources as part of a broader plan to restore affordable lodging.

But it is uncertain that will help people like Dr. Barba quickly. Despite Spain’s recovery from the financial crisis, wages have failed to keep pace with the growth in the real estate market. Nearly a fifth of workers earn the minimum wage of €1,134 a month, while rents in Madrid jumped 15 percent in 2023. A 3.2 percent inflation rate has added to the strain.

Dr. Barba has been saving money for the past three years for a down payment on a home. She rented a room in a shared apartment in Barcelona when she began training as an allergist at a downtown hospital. But her monthly income was consumed by basic living expenses including food, rent and transport.

To save more, she transferred to the hospital in Madrid and now lives with her parents rent-free outside the city, working overtime to bump up her salary to €1,900. But with homes even in her parents’ village priced at half a million euros, she feels hopeless.

“It would take years to save up enough to put down a deposit on a home,” Dr. Barba said. “Buying a home is just a dream.”

Rachel Chaundler contributed reporting from Madrid, and Niki Kitsantonis from Athens.