EQTY Capital – A Platform for Golden Visa Investors

We welcomed Michael Maxwell, Head of Business Development at EQTY Capital to explore the Portugal Golden Visa, investment routes and the real estate market, on our podcast, The Golden Quarter Show.

EQTY Capital – are the initiators of an investment platform of professionally managed and regulated funds, luring Golden Visa investors from across the world.

Key takeaways from our conversation with Mr. Michael Maxwell were:

1. What EQTY Capital offers those looking at investing in Portugal and how they are doing things differently
2. What is driving the real estate market in Portugal and what are some of the issues its facing
3. Decisions, decisions, invest in real estate or funds?

Michael Maxwell has worked in financial services, fund management and corporate services for over 12 years across Portugal and London, during which he has held various board positions. Michael holds a Post Graduate Diploma in Business Administration from the Wits Business School in South Africa and a BA (Law and International Relations) from the University of the Witwatersrand. Michael has been working closely with private clients and introducers from Switzerland, London, Turkey and South Africa, a role which he will continue with under EQTY Capital. EQTY Capital is a privately-held Real Estate Investment Company based in Lisbon, Portugal.

An innovative investment platform

Lorena Jimenez: Welcome, Michael to the Golden Quarter Show, we’re pleased to have you.

Michael Maxwell: Thank you so much, Lorena, I really appreciate the opportunity to speak with you today and personally speaking, our interactions have been nothing but positive and we’re thoroughly impressed with the professional operation that you run.

Lorena Jimenez: Thank you so much for that, Michael. Just to start things off and to give our listeners a bit of an introduction in terms of EQTY Capital if you could perhaps run us through what aspects of your vision, your company ethos, or perhaps the approach that you take to your clients – what is it that differentiates you to other providers?

Michael Maxwell: EQTY Capital are the initiators of an investment platform of professionally managed and regulated funds, and this word “platform” is central to our ethos as we firmly believe that good people working together can truly achieve great things.

As the platform grows, naturally it increases in value, increases in quality, and constant betterment, and this belief, we really do put into practice, as EQTY is always the founding unit holder of any fund on the platform.

It’s fair to say that prime residential real estate is at our core and what we’ve done is something quite different.

EQTY Capital has established a platform of leading developers in Portugal, from which we preselect non-development stage acquisitions, usually ahead of the market and with a pre-build, as well as bulk purchase discount. This means that any investment made has inherent upside as well as downside protection.

Currently, there are 15 developers on the platform, which is up from the 5 we started last year, on the 1st of April ’21, which leads to portfolios with exceptional diversification. This contrasts with the common single developer focused fund that you so often see in Portugal.

I think this is what prospective investors really do appreciate.

They appreciate this approach – this diverse approach as it mitigates the construction and sales risk associated with property developments.

Growing funds industry in Portugal

Lorena Jimenez: In terms of what EQTY Capital has on the horizon in terms of future developments, I noticed you mentioned how your platform was growing, so I thought I’d enquire what you have got planned ahead for the company.

Michael Maxwell: We are looking at growing – no doubt about that, I think 2021 exceeded even our own best expectations with three funds initiated, all of which nearly fully subscribed and that was in our first year of operation alone, from April to December last year.

I think what resonated strongly was our unique ability to strategically identify the prime units in the best projects in the most desired locations delivered by leading developers in Portugal.

I suppose that’s what set us apart so we are taking that further.

It’s working well and we’ve recently initiated the launch of two new funds in a very similar vein aiming to provide access to quality, sustainable, and long-term investment opportunities primarily in real estate, but not only and could also include possibly technology, as well as education.

These funds are professionally managed, of course, by highly skilled and regulated fund managers who always have the ultimate decision-making ability. This is very important to note as we’re merely the advisors to the fund.

We identify investment opportunities, present those from our investment committee to that of the fund manager, who would then check – do the investments comply with the fund regulations? Are they commercially sound? And are they in the best interests of the fund? And if they are in the best interests of the fund they are in the best interest of the investors.

Lorena Jimenez: From the client’s perspective, for high-net-worth individuals, how important is it for them to actually diversify their portfolio by investing in residency permits like the Portuguese Golden Visa?

Michael Maxwell: I think there is a common misconception that investments which are linked to the right of residence are something for those investors from countries with social or political instability.

The truth is that high net worth (individuals) from even your most established and stable jurisdictions are increasingly looking at these products.

Obviously, investors expect to have a diverse array of choice. Most importantly, such choice must be in a robust, regulated and managed structure and it’s really this that we’re looking at providing: offering exceptional diversification not only in regulated product, but also in prime real estate developments too.

EQTY resonates strongly with these internationally minded individuals who expect to engage with commercial expertise and corporate ethics of the highest standards – this is the key for these individuals.

They are looking at investments linked to residency, but it’s important that the investment can stand essentially on its own two feet and not need the attachment of potential residency to justify its existence.

Track record, team, governance, conflicts of interest, really need to be considered and should these fundamentals stack up then the right of residency is merely a bonus, and the decision to invest is an easy one.

Golden Visa investors from around the World

Lorena Jimenez: In terms of demand, what markets have you been seeing demand coming in from in the last 12 months?

Michael Maxwell: Our statistics align with those of the greater Golden Visa program in Portugal, so there’s been a large increase in American investors, they tend to be the largest in number as well as the fastest growing. Then historically, there’s always been a strong number of South Africans, as well as Turks looking at the Golden Visa program, we experienced a solid amount of British passport holders post-Brexit, who are still looking for an EU footprint.

A lot of these would have come from the UK, London in particular, but a number are expats out of the likes of Hong Kong, as well as Singapore, Sydney and out of the UAE – so it’s really very diverse.

We’ve had people as far afield as New Zealand, Australia, Canada and as I said, it’s not necessarily countries that you’d expect where there are inherent difficulties or problems.

It’s something that people are looking at, and I suppose, considering the challenges currently facing the world and the lessons learned, particularly during the global response to COVID, such planning is not only prudent for high net worth (individuals), but essential for those who are in the privileged position to afford it – and they absolutely should.

Read more: Henley & Partners realizes your “Portuguese Dream”

What is driving the Portuguese Real Estate market?

Lorena Jimenez: As the world gets a little bit more volatile, having this investment class (residency by investment) is definitely becoming a priority as opposed to a complimentary extra. There’s been a lot of points highlighted in terms of what the benefits of the Portuguese Golden Visa are and the Non-Habitual-Residence scheme as well, but there are clearly other fundamentals that are driving the real estate market in Portugal – could you perhaps shed some light on that?

Michael Maxwell: Absolutely, having lived here on and off for the last 13 years, but full time for the last six years, it’s very clear that investors have realized the potential of Portugal and the quality it offers.

Interestingly, what resonates strongly are elements that Portugal has never lacked – it’s something that they’ve always offered. Perhaps the change is the marketing of the Portugal brand has significantly improved in recent years.

Beyond a wonderful climate and natural beauty, it’s a warmly welcoming country where one can enjoy the simple things in life in a very cultured, safe, diverse, and affordable as well as stable environment.

Commercially, Portugal has been performing well for several years and it’s an exciting time to look into the country from an investment point.

Without doubt this demand or increase in demand to invest in Portugal has never been higher and naturally, as a result, real estate prices are increasing. So, it is true, but perhaps not enough is being said about the lack of supply and the impact that the lack of supply is having in the market and prices.

Portugal has less than half the EU average of newly completed houses per 1000 inhabitants and until this is addressed, it’s likely that demand will continue to pull away from supply.

This is clearly a central part of the dynamic we’re experiencing at the moment.

The misconception that this is a real estate market driven by Golden Visa demand is one I’d like to put to bed and really highlight that out of almost 200,000 properties sold in Portugal in 2021, 11% of those went to foreigners, but only 1.5% went to Golden Visa buyers. So clearly there are a number of other solid fundamentals that are driving the market and bringing people to Portugal.

The Supply Issues in Portuguese Real Estate

Lorena Jimenez: When you mentioned that one of the issues is that there is a lack of supply and that needs to be addressed – is that on the policy horizon for the Portuguese government there? Is in the market looking at increasing supply? What’s the actual situation on the ground there?

Michael Maxwell: So one of the main reasons that supply is low is the slow approval process of municipalities to issue construction licenses and steps are being taken to make this a more efficient process and one that’s less timely – that will certainly help.

At the same time, the benefit of being a more challenging market for developers to establish themselves in has provided an actual hand brake to the problem of oversupply, which is another discussion entirely.

But I think looking at what municipalities are putting together, I think things are moving in the right direction just to ease up the flow of construction licenses, which hopefully sees a greater supply of new build projects coming to market in the next year or two.