Listen to this article
Edmund Zhao’s panoramic office window frames a blue expanse of ocean fringed by tall palms. The sunlit scene at Estoril, a resort near Lisbon, is a long way from the haze of Hangzhou, the city of 21m in eastern China where Mr Zhao made his fortune in property development.
“I worked more than 16 hours a day, seven days a week, 365 days a year,” said Mr Zhao, who was a senior executive and shareholder of Greentown China. “Another 10 years like that and I would’ve been spending all my money on hospital bills.” Last year he moved to Portugal and opened a new property consultancy. “Here you can turn your phone off after 6pm,” he says. “No one will call you”.
Mr Zhao is one of a growing number of well-off Chinese entrepreneurs who are leaving China to take advantage of so-called “golden visa” residence schemes offered by cash-strapped countries in the eurozone.
The US, Canada and Australia were long the first-choice emigration destinations for Chinese but EU governments such as Portugal, Cyprus, Greece, Hungary, Latvia and Spain are increasingly appealing to Chinese homebuyers by offering residency permits to non-Europeans who buy local properties.
By putting down a few hundred thousand euros for a house or an apartment, investors can gain the right to live in an EU country and travel freely in the 26-nation Schengen area. In Portugal, which runs the most successful visa scheme to date, the Chinese are by far the biggest buyers.
This is the latest twist in a trail of Chinese money moving into Europe. The Financial Times in a series of stories is exploring the ambitions and the strategies of Chinese investors and migrants as they seek new lives and new markets.
Paulo Portas, deputy prime minister and architect of the Portuguese visa system, says it has revived a property market previously paralysed by recession. So far, the visas have been credited by real estate associations with bringing almost €900m in real estate investment in less than two years, a figure forecast to reach €2bn by the end of 2015.
The hot property market in Lisbon plays to China’s vision of Portugal as a European anchor to connect with businesses in other Portuguese-speaking countries such as Brazil and Angola. “Chinese executives working in Africa can make a home in Portugal where their children can go to school and they can visit,” says Miguel Frasquilho, head of Aicep, Portugal’s trade and investment agency.
Mr Zhao said he knew Portugal was a good buy the moment he arrived. “The sea, the sky, the air, the sun, the people. I love it all,” says Mr Zhao. The next day, he spent €500,000 on an apartment in Estoril.
The sale price qualified him to apply for a visa that allows him and his family to live in Portugal for five years and then apply for permanent status. Mr Zhao said he is here to stay: he has set up Golden World Property Investment Consultants to advise fellow countrymen following in his footsteps.
Of the 1,360 such visas Portugal has issued since launching its scheme in 2012, 81 per cent have gone to Chinese nationals. Non-EU nationals who buy a property for €250,000 in Greece or €300,000 in Cyprus, other countries hard hit by the eurozone crisis, can also qualify for residency.
Spain requires a €500,000 property purchase to issue a golden visa – and so far, Chinese investors account for a third of the 134 permits issued there. But more are in the pipeline – even though, unlike in Portugal, new owners will have to wait 10 years to apply for permanent residence. “We are seeing an explosion of applications,” said Jaime Garcia-Legaz, Spain’s commerce minister. “It started slowly but in May alone we had 500.”
Greece began offering a five-year residence permit in mid-2013, setting the purchase threshold at €250,000 – the price of a small apartment in a seaside suburb of Athens or a villa in Crete or Rhodes. So far, there have been a few dozen applicants.
Such schemes are bringing some related investments. Alystair Kung left Hong Kong for Lisbon in October 2012 to assess the potential market for CBIEC, a Chinese firm that helps wealthy investors – China now ranks second behind the US in the number of millionaires – move overseas. He now employs 12 mainly Chinese speakers in the firm’s first European branch. “Competition among companies like ours is pretty intense,” says Mr Kung.
Until recently, Portugal’s Chinese community, estimated at fewer than 20,000, consisted almost entirely of first-generation emigrants running cut-price shops and restaurants. That image is changing. Along Lisbon’s Avenida da Liberade, the chic shopping street where Mr Kung’s offices are located, wealthy Chinese tourists and newcomers can be seen buying Prada, Gucci and Ralph Lauren.
Yansi Xu, a Chinese graduate employed by Portuguese property developers Libertas (pictured), said the residency possibility is what largely lures Chinese buyers. “If people were buying property just for the return on their investment, they’d buy in the UK, Australia or the US. Here it’s all about the golden visa . . . Chinese are the only nationality we sell to whose primary aim is to get a golden visa”, he said.
Chinese firms operating in Portugal say most visa applicants – unlike Mr Zhao – do not plan to relocate their entire lives: they calculate only one in five Chinese investors will spend more than seven days a year in Portugal, the minimum requirement to retain a visa. Rather than moving permanently abroad, most Chinese apply for the visas to secure a ‘Plan B’ escape route from their own country.
“The market for investor residence permits consists essentially of wealthy people living in countries they feel to be politically, economically or religiously unstable,” says Charles Roberts, whose Fine & Country real estate firm has sold about a 100 properties to Chinese.
“People are concerned about political changes or an economic crisis and want the comfort of knowing they can leave,” said a prospective Chinese buyer who asked not to be named. The promise of cleaner air, less overcrowding, less intense job pressures and a good education for their children are all part of the calculation to move. Religious freedom is also an issue for some buyers, according to estate agents.
Europe’s visa schemes are being scrutinised for potential abuse, within individual countries and across the continent. “Courting the world’s moneyed elite by relaxing standard admission and naturalisation requirements may enrich the coffers of a country in the short run but in the long haul, it risks cheapening something far more important: citizenship itself,” Ayelet Shachar, a Canadian law professor, said in a working paper commissioned to inform the debate in Europe.
Ana Gomes, a Portuguese member of the European Parliament, has condemned the schemes as “the sale of nationality by instalments” and a threat to “the values and security” of the EU. As would-be immigrants risk their lives daily to enter Europe, is it right to promote “unequal treatment” by discriminating against those who lack the “substantial financial resources” for a golden visa, she asks.
Most prospective Chinese buyers land in Lisbon knowing almost nothing about the country and speaking no foreign languages. “If they like football, they may have heard of Cristiano Ronaldo, but that’s about it,” says Mr Kung. Private Chinese emigration agencies in Beijing and Shanghai have orchestrated the big sell – lining up potential properties through local Portuguese agents who often have a limousine waiting for their clients.
Getting money from China into the hands of a sales agent is a challenge. No individual may export more than $50,000 in currency per year. To transfer the €500,000 needed to purchase his property in Estoril, Mr Zhao, like other golden visa emigrants, organised friends and family to loan him their annual currency allowances.
Portugal has had greater success with Chinese investors in part because it has more flexibility. In Spain, the collapse of the property market during the financial crisis, meant many newly-built homes fell into the hands of banks, which had less ability to negotiate over price.
“They transformed our business in 2013,” says Mr Roberts, whose firm sold properties worth about €50m to Chinese that year.
A Chinese taste for sleek glass and concrete decor and high-rise city views is changing the face of Lisbon as well. Developers, unable to build new units fast enough, are racing to renovate. “Forget about picturesque or historic,” says Luísa Tavares of Libertas. “The Chinese want brand new buildings in prime locations.”
Additional reporting by Tobias Buck in Madrid, Kerin Hope in Athens and Robin Kwong in London
Changing face of Chinese immigration
Chinese migration to Europe has changed from “simple labour immigration to a multi-faceted situation”, according to a 2014 report by the Chinese Academy of Social Sciences, a government think-tank.
But China is also now a land of personal wealth – with people who have money to spend beyond its borders. The country had 2.4m millionaire households in 2013, second only to the US, according to the Boston Consulting Group. Forbes magazine estimates there are now a record 152 Chinese billionaires.
Hurun, a wealth report firm that focuses on China, estimates that 64 per cent of the country’s millionaires have already left the country or plan to emigrate. Escaping high-pressure jobs, pollution and overcrowding, as well as seeking a better education for their children, were the top reasons cited.