Portugal plays the silver economy card
An increasing number of pensioners decide to spend their retirement days in Portugal, making a return on the Lusitanian silver economy.
Portugal, alongside Greece, was considered for as the weak link in Europe during the debt crisis. Abandoned by investors, financial circles expected the worst for the national economy. However the country managed to succeed somehow in redressing the economic situation from an estimated -4% GDP decline in 2012 to nearly 15% growth in 2015 according to data from the World Bank.
A determined governmental declaration
This recovery was made at the cost of political austerity but also by the exploitation of new economic sectors, among which was the silver economy. The silver economy assigns economic activities to the elderly. Over the last few years, it has developed well to the point that it is often referred to as the new Florida.
In 2009, amongst all of the budgetary and economic turmoil, the Portuguese government issued a law-decree validating the status of the non- habitual resident (NHR), intended to facilitate the settlement of investors and foreign pensioners. It allows for tax exemptions for these pensioners for a period of 10 years under the condition that they live a minimum of 183 days per year in Portugal. In 2012, the government insisted and declared the the simplification of obtaining the NHR status effective as of 2013. It is now sufficient to testify to having not been a tax-paying Portuguese resident for the last 5 years in order to profit from this status. The Portuguese taxation system has therefore shown itself to be very attractive to foreigners and the government’s expectation to be ambitious. The target for the years 2014 through 2016 for example, was to accommodate 20,000 French people.
Reasons for its success
These measures have very quickly attracted the attention of consultancy agencies and specialised investment press. Countries like Morocco were previously seen as the Eldorado for the elderly to profit from a golden retreat in the sun. However nowadays geopolitical trouble and terrorist attacks in Maghreb have boosted Portugal’s attractiveness which has been deemed safe and without security risk.
Portugal benefits from its coastal geographical location and above all from its most valued region, Algarve , beloved for its year-round sunshine and warm temperatures. Its attractions are numerous for foreign nationals. Cultural similarity and the warm welcome of the Portuguese people are regularly showcased in specialist journals. Being a member of the euro zone, there is no issue with exchange rates for many Europeans. Portugal is also served by low-cost airlines. It’s also possible to get return flights for around €50 from many European cities for a journey of only a few hours.
Portugal’s real estate market is far less expensive and the cost of living, according to the OECD, is 35% less expensive than in France. In terms of healthcare, Portugal ranks 12th out of 154 countries by the WHO (World Health Organisation). It has proven itself to be a paradise for retirees who often complain about their poor purchasing power. Out of the 7,000 French who settled in Portugal in 2014, 80% were retirees.
A developing economic sector
As a consequence of these efforts and the success achieved, the silver economy has really taken off. An increase can be noted in the number of consulting agencies which optimise pensions, support setting up abroad and take administrative action. Their presence is more and more prominent in senior citizen organisations. Likewise, the creation and the development of medical insurance has grown. Insurance includes cover for expatriates. The private sector is a relatively important proportion of the health system.
The most revealing sector of this regime is without question real estate. In 2014 a good fifth of property sales were that of foreigners. A growing part of this sector is aimed towards a clientele of expatriates. Professionals learn foreign languages and are always recruiting more Anglophone and Francophone staff. Real estate before the crisis has not experienced a real speculative bubble, thus making it more attractive now to Europeans from different countries whose rental prices are much higher. Investors are therefore looking to make a profit and for retirees with few savings that Portugal attracts.
Banner photograph: Praia da Rocha in Portimão, Algarve, Portugal. Credit Steven Fruitsmaak.