International Investment | 7 August 2023
Portugal Golden Visa shifts eyes towards green gold
by Jonathan Boyd
Agriculture is being flagged as the replacement for residential property investments following the recently announced changes in law to Portugal's Golden Visa programme, as investors are being urged to look towards funds such as Pela Terra and Terra Nova.
The Pela Terra Farmland fund is a private equity / venture capital fund, managed by STAG Management SCR SA and regulated by the Portuguese Securities Market Authority (CMVM).
The EUR50m fund "funds the purchase of quality farmland and uses long term contracts to lock in a fixed rate of rental income from large scale farm operators, while also capitalizing on appreciation in land value over the life span of the fund."
The Terra Nova fund is offered by Iberian agriculture asset manager Terraverde Capital, which is acting as advisor, with Quandrantis Capital as fund manager. It too cites the longer term IRR from an asset class exhibiting significant non-correlation to equities and fixed income securities. Portugal does not tax profit geneated by private equity funds, according to the Terra Nova investment deck.
Citing the new rules, both these funds point to a EUR0.5m minimum investment into relevant funds to gain access to the Golden Visa programme.
Both funds also point to prevalence of agriculture assets in Portugal and/or Spain being undervalued versus EU averages, meaning additional potential upside from investments that can release value.
The European Commission notes that Portugal has the EU's oldest farming population - as noted in the revised CAP Strategic Plan of Portugal published in mid-2022 - and that "One of the main aims of the Portuguese Plan is to increase farmers' income, mainly through income support and investment interventions."
However, the longer term outlook for agriculture and farmland in Portugal should also be put in context of concerns over climate related risk.
European Food Agency News noted in May that the agriculture ministers of both Portugal and Spain urged the European Commission to release contingency funds from the Common Agricultural Policy (CAP) to help farmers, especialy in southern Europe, deal with drought.
According to OECD data, in the 2009-19 period in Portugal "The agricultural sector is the largest water user, accounting for 80% of total water abstractions in 2018 (European Commission, 2019) and for 76% of groundwater withdrawals in 2010 (OECD, 2015)."
