For many wealthy Brazilians, Portugal is becoming the new Miami

[LISBON] Brazilian entrepreneur Ricardo Bellino knows a good deal when he sees one. So after more than a decade living in Miami, he decided to move across the Atlantic to Portugal, where a booming real estate market and tax breaks are attracting a growing number of wealthy Brazilians.

The 53-year-old multimillionaire, who made his fortune in the modeling business, bought a home last year in an exclusive resort on a hill near Lisbon, where he is planning his next business ventures. In Portugal, Bellino will benefit from a flat income-tax rate of 20 per cent and may be entitled to a tax-free pension when he retires.

"It was a chance to live in a tax haven that isn't an island in the Caribbean," said Bellino, whose grandfather was Portuguese. "We're in Europe, in a country that has been going through a revival over the last few years."

Portugal introduced the tax incentives a decade ago in a bid to attract wealthy foreigners to the southern European country. In 2012, a year after seeking an international bailout, the nation of 10 million began offering resident permits to non-Europeans who bought real estate worth more than 500,000 euros (S$772,000).

Portugal's incentives for wealthy immigrants contrast with US President Donald Trump's efforts to limit immigration, though last week, he proposed a "merit-based" system intended to favor immigrants with special skills.

In Portugal, a tourism and property boom followed the immigration incentives and helped the economy post its strongest growth in almost two decades in 2017. It also led to a backlash among Portuguese who saw themselves priced out of the housing market as the new demand pushed up values.

The French, who have one of the highest tax burdens among 34 developed countries, were the biggest foreign homebuyers in Portugal in 2017, accounting for 29 per cent of foreign property investment, according to Portugal's Real Estate Professionals and Brokers Association. Brazilians, whose language is Portuguese, came second, with 19 per cent of total foreign investment, followed by the British, with 11 per cent, and Chinese buyers, with 9 per cent.

Brazilians are catching up fast and are already the biggest foreign property investors in the capital Lisbon in the south and Porto in the north.

"They're buying homes everywhere," said Luis Lima, head of the Lisbon-based brokers association. "These Brazilians are completely different from those that came to Portugal in the past. They belong to a higher social class."

Colonial Master

While immigration between Brazil and Portugal, its former colonial master, has flowed back and forth in line with economic booms and busts, wealthy Brazilians have for decades favored young, hip, international Miami, viewing Portugal as a melancholic nation, nostalgic for its glorious past. That characterization can be seen in the Portuguese love of fado, a national musical genre full of loss and sadness that contrasts sharply with the livelier African-influenced Brazilian samba.

"I first came to Portugal in the 1970s and was struck by how much poverty there was," said Claudio Madureira, a 70-year old Brazilian pensioner who moved to Portugal last year after shutting down his construction company. "My memories of Portugal were like images on a black-and-white television screen."

Safe Haven

All that began to change after Portugal completed its international bailout program in 2014 and a tourism and a real estate boom transformed entire cities with boutique hotels, Michelin-starred restaurants and luxury apartments and stores that cater to foreigners. The tax incentives and the perception of Portugal as a safe place -- it ranked fourth in the 2018 Global Peace Index -- were the cherry on the cake for many Brazilians.

Brazil is one of the world's most homicidal countries, with an average of 175 people killed every day in 2017, according to the Brazilian Forum of Public Safety, a non-governmental organization that collects crime data. Violent crime rates have fallen since 2018, a development that began before President Jair Bolsonaro was elected, though that hasn't stopped him from claiming credit. Nor has it convinced many Brazilians to return.

"I've lost hope that things will ever improve in Brazil," said Madureira, who now enjoys playing tennis on weekdays with other Brazilian expats in Cascais, a seaside town near Lisbon.

Priced Out

In Chiado, one of Lisbon's most expensive quarters, some residents say their neighbor, Brazilian national Regina de Camargo Dias, is Portugal's richest woman. Camargo, one of three sisters who control construction and cement company Camargo Correa SA, is among the wealthy Brazilians who have bought homes in the Portuguese capital Lisbon, where the price can reach as much as 10,000 euros per square meter (S$15,400 per 10.8 square feet).

For many locals who complain they're getting priced out of a property market that goes out of its way to lure foreigners, that's a cause for concern. Median home prices in Lisbon rose 23.5 per cent in 2018 to reach an average of 3,010 euros per square meter, while the net average monthly wage of Portuguese workers increased 3.7 per cent to 888 euros, according to the National Statistics Institute.

"It's very sad," said Isabel Sa da Bandeira, who heads a Lisbon-based organization called People Live Here aimed at reminding authorities about the remaining residents in the capital. "Prices are out of control. Even people with jobs can't afford to live in the city."

Still, prime real estate in Lisbon remains much cheaper than in cities such as London or New York. The price of a 3,100-square-foot three-bedroom apartment in one of Lisbon's most exclusive buildings, Sky Flats Castilho 203, is listed at around US$5.4 million on the website of Lince Real Estate. A similar property on New York's Park Avenue may reach as much as US$24.8 million, according to Sotheby's International Realty.

'Three Minutes!'

Economy Minister Pedro Siza Vieira said in an interview that the lack of affordable housing in some Portuguese city centers "is a concern."

"We know that this is a global phenomenon -- that prices are going up in the center of the cities -- which creates a social problem," he said.

Bellino, who says he convinced Trump in three minutes in 2003 to invest in a half-billion-dollar golf resort in Sao Paulo that never got built, sees Portugal as a country full of opportunities. Bellino, who bought his home in Key Biscayne, Florida, at the start of the financial crisis in 2007, when the Brazilian real was strong and the dollar was weak, says he's now looking to invest in a range of businesses in Portugal, including education and real estate ventures.

"I normally see a business opportunity where there is a crisis," said Bellino, who spun his encounter with Trump into a book on the art of the pitch and called it "You Have 3 Minutes!" "As a dedicated entrepreneur, when everyone is crying, I like to sell tissue paper."

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