How Portugal is wooing Kenyan homebuyers.

Poor Kenyans are looking at buying second and third homes in Portugal, moving away from a previous attempt to buy property in the UK and Dubai. They want to diversify their wealth and buy homes that promise high returns, as well as ensure their eligibility for citizenship.

Francisco Salgueiro, an investment and immigration lawyer currently based in Kenya, says property values in Portugal have risen 87 percent in the past five years, promising good returns for homebuyers. Investing in real estate is also an easier way for Kenyans to obtain a second citizenship in Portugal, where they will have access to better education for their children, technology and standard of living. Lisbon has also become a popular vacation destination for wealthy Kenyans, and having a home there has its advantages. "People are looking for alternatives to invest, especially those coming from countries where currency depreciation is a major problem. The opportunity to diversify investment portfolios into more stable areas is very attractive," says Mr. Salgeiru.

In the past, wealthy Kenyan women have sought second homes in St. Kitts and Nevis.

Why? Its education system is better, securing citizenship is affordable as investment requirements are fairer, and it is cryptocurrency friendly, which attracts tech investors and entrepreneurs. St. Kitts and Nevis is home to some of the most sought after medical facilities and the high school enrollment rate is 91 percent, which means that if a Kenyan citizen passes a security check, invests at least Sh30.6 million to Sh45.9 million ($200,000 to $300,000) in real estate, they can pass on citizenship to their children who will be able to receive privileged education and health care.

Portugal, which is now attracting Africans

Many investors and entrepreneurs may have a financial opportunity, but the visa process is becoming a death knell. You need to invest 46.6 million shillings (280,000 euros) to get a residence permit, whether you live in Portugal or not. A residence permit can eventually lead to citizenship after five years. You may not be a Portuguese citizen or live there to invest in real estate," he adds.

The Chinese used to be the most active foreign buyers of real estate in Portugal

The Americans, however, have taken over. In Africa, South Africans invest the most in real estate in Portugal. So what are the benefits for Kenyan investors?

Trushar Khetia, founder and CEO of Casa Capital, a private equity firm offering opportunities to live in Portugal, says that with a residence permit, the buyer gets all the benefits of a citizen except the ability to vote. Kenyan-Portuguese have the freedom to travel, work and live in any country in Europe and can pass on citizenship from generation to generation as inheritance of real estate is tax free.

Investors have the option of buying commercial buildings, apartments or hotels. Mr. Salgueiro says that on average, an investor can recoup their investment in rental apartments in a year with a return of at least five percent. For example, a one bedroom apartment in Lisbon sells for 83.3 million shillings and fetches about 2 million shillings a year when rented out for short periods. On the other hand, a three bedroom apartment will cost them only 109 million shillings. "The return on rent is a double-digit percentage increase in property values, 87 percent over five years to be exact. Rental income is so good that it allows very smart investors to diversify their investments while earning rental income. For others, we also encourage building a portfolio of properties through buying and selling," Mr. Khetia said.

Investing overseas is becoming attractive as Nairobi suburbs such as Runda and Spring Valley are slashing prices by double-digit percentages due to liquidity squeeze. Mr. Khetia, also an investor, says the cost of living in Portugal is also low compared to neighboring countries. "From 2019, foreign buyers are having a significant impact on the market, acquiring 40,700 residential homes and investing 12 billion euros. Their contribution, however, is only six percent of sales transactions and 11 percent of sales volume," says Mr. Khetia.

In addition, Portugal is ranked as the fifth most powerful passport in the world in 2023, giving access to 187 countries without a visa. The climate is also good, not characterized by extreme harshness in winter. "Tourism is booming, with 80 percent international flights. The number of visitors increased by 23 percent. This shows that people are still willing to invest," Mr. Khetia adds.