Fund vs Real Estate: The Post-2023 Reality

Law 56/2023 ("Mais Habitação")

In October 2023, Portugal enacted Law No. 56/2023 (commonly called "Mais Habitação" or "More Housing") which fundamentally transformed Golden Visa eligibility. This legislation eliminated direct real estate investment from the program entirely.

Geographic Restrictions (Restricted Zones)

Even before the complete removal, the law specified restricted zones where real estate investment was explicitly forbidden:

• Lisbon metropolitan area (including surrounding municipalities)
• Porto metropolitan area
• Coastal corridor connecting Lisbon and Porto
• Most tourist-heavy coastal regions

The Reasoning

The government cited several concerns:

• Housing affordability crisis, particularly in Lisbon and Porto
• Foreign investment inflating property prices by 40%+ since 2012
• Only 2% of Golden Visa holders actually resided in Portugal
• Desire to redirect investment toward the productive economy

The Result: ARIT Funds

Investment funds—specifically ARIT (Ativos de Investimento de Risco Titulados) funds registered with CMVM and confirmed by AIMA—became the primary qualifying pathway. ARIT funds must invest at least 60% of capital in commercial companies headquartered in Portugal.

Minimum Investment: €500,000

The qualifying minimum for ARIT funds is €500,000. You may encounter €250,000 or €350,000 figures in older resources—these referred to outdated routes (pre-2023 rehabilitation real estate in low-density areas) or different visa categories. For 2025-2026 Golden Visa via funds, budget €500,000 minimum.

Other pathways exist (capital transfer of €1.5M+, company creation with 10+ jobs, scientific research) but funds are the most practical for passive investors seeking a defined investment structure.

For complete regulatory details including Law 61/2025 (citizenship timeline changes), see our Regulatory Status page.

Even when real estate was available, funds had distinct characteristics:

Investment Amount

• Real Estate: €500,000 (or €350,000 for rehabilitation projects)
• Funds: €500,000

Liquidity

• Real Estate: Low. Selling property takes months and incurs transaction costs (6-10%)
• Funds: Medium. Most funds have 7-10 year terms with defined exit procedures

Management

• Real Estate: Active. You handle tenants, maintenance, property management
• Funds: Passive. Professional managers handle everything

Diversification

• Real Estate: Single asset. All €500K in one property
• Funds: Diversified. Spread across multiple Portuguese companies

Returns

• Real Estate: Rental yield (3-5%) + appreciation (variable, market-dependent)
• Funds: Target IRR varies by fund type (2-15% depending on strategy)

Tax Complexity

• Real Estate: Portuguese property taxes, rental income taxation, capital gains
• Funds: Fund-level taxation varies; US investors face PFIC considerations

Exit Certainty

• Real Estate: Market-dependent. No guaranteed buyer
• Funds: Defined fund terms with liquidation procedures

For many investors, the shift to funds is actually advantageous:

1. No Property Management Headaches
You don't need to find tenants, handle repairs, or deal with Portuguese property regulations from abroad. The fund manager handles everything.

2. Better Diversification
Instead of betting €500,000 on one apartment in Lisbon, your investment is spread across multiple companies, sectors, and sometimes asset classes.

3. Professional Due Diligence
Fund managers conduct thorough analysis of investment opportunities. You benefit from their expertise rather than navigating Portuguese property markets yourself.

4. Regulatory Protection
CMVM-regulated funds have mandatory audits, investor protections, and transparency requirements. Portuguese property transactions have fewer built-in safeguards.

5. Clearer Exit Timeline
Most funds have defined terms (7-10 years) and liquidation procedures. Property exit depends entirely on market conditions and finding a buyer.

6. Lower Transaction Costs
Fund subscription fees (1-3%) are typically lower than property transaction costs (6-10% including transfer tax, notary, legal fees).

Funds aren't perfect. Here's what you give up:

Less Control
You can't choose specific investments. The fund manager decides where your money goes within the fund's strategy.

Returns Depend on Management
Unlike property where you can influence value through renovation or management, fund returns depend entirely on the manager's decisions.

Less Tangible
Some investors prefer owning "real" assets they can see and touch. Fund units are financial instruments, not physical property.

Fee Structures
Funds charge ongoing management fees (1-3% annually) plus potential performance fees. Property has holding costs too, but they're more visible.

Liquidity Restrictions
Most Golden Visa funds have lock-up periods matching the 5-year residency requirement. You can't easily exit if you change your mind.

Tax Complexity (for some nationalities)
US investors face PFIC reporting requirements that didn't apply to direct property ownership. UK investors may face different tax treatment than property rental income.

Fund investment is ideal if you:

• Want passive investment without management responsibilities
• Prefer diversification over concentrated property bets
• Don't plan to live in Portugal full-time
• Want professional management of your investment
• Prefer defined exit timelines over market-dependent property sales
• Have limited knowledge of Portuguese property markets

Fund investment may be challenging if you:

• Strongly prefer tangible, physical assets
• Want maximum control over investment decisions
• Are a US investor uncomfortable with PFIC reporting
• Want to use the property personally (vacation home)
• Have specific real estate expertise you want to leverage

If you originally planned to use real estate but now must consider funds:

Reframe Your Expectations
Think of fund investment as purchasing access to Portuguese residency and EU mobility—not as a traditional investment. If the fund returns your principal after 7 years with modest gains, you've still achieved your immigration goal.

Focus on Risk Management
Choose funds with conservative strategies if capital preservation matters more than returns. Diversified mutual funds carry less risk than venture capital funds.

Consider the Opportunity Cost
Your €500,000 would have been illiquid in property anyway. Fund investment isn't necessarily more restrictive—it's just different.

Use the Professionals
Unlike property where you might trust your own judgment, fund selection benefits from independent advice. We help investors match funds to their risk profiles and tax situations.