Each fund manager or fund advisor has been invited to answer a series of questions about their own funds as well as the market in general. We sat down with fund promoter José Matos da Silva to find out more about Portugal 88 Investment Fund.
Could you please start by giving us some background about yourself and the team working on Portugal 88 Investment Fund?
As promoter and advisor to the fund, I’m the creator of the business plan behind it. My background is from a very different world, I come from technology and ecommerce industries having managed large innovative businesses I learned that the key is to always start from the customer perspective. That’s what we did with Portugal 88 and I believe this is the most investor-focused fund.
From the short-term rental and real estate industries, our team includes former founders of reputable short-term rental companies, luxury villa managers in top luxury hotel brands, in the world, and I’m a real estate investor with over 27 properties in Cascais, Portugal.
After many in-depth interviews with fund manager organizations I selected Insula Capital as the best quality vs cost option, they really understood our innovative approach and their >€500M in their portfolio funds.
Why did you decide to create Portugal 88 Investment Fund and what’s the meaning behind the name?
Portugal 88 came from spotting an opportunity to create an investor-focused experience leveraging on a pretty big and untapped opportunity, which is luxury short-term rental and luxury real estate in Portugal.
I had three foreign friends who did Golden Visa (aka residency by investment) in Portugal, all of them felt that the investment options available were transactional and no one created a journey for the five years until they can become citizens.
The number 88 symbolizes luck and fortune in Chinese culture, having lived there for many years and since my largest network is also there, I felt this was a good homage to those great years I’ve spent there.
Has the management/advisory team invested in Portugal 88 Investment Fund and, if so why? If not, why not?
Yes, first because it’s a show of trust to our investors, we need to have skin in the game. Second, and probably the real reason, is because we want to tap on those dream 14 days a year free stays at any of the funds luxury properties [Laughs].
Portugal 88 Investment Fund’s chosen investment profile centers around luxury, short-term rental properties. You’re looking at investing for future upside potential and yields for regular income. Please explain your thought process behind opting to focus on this specific segment of the market.
Portugal is trending worldwide, it’s a small country with a limited offer trying to accommodate global demand. The hospitality sector had the best years ever (excluding the pandemic) and it is poised for exponential growth. The luxury segment in hospitality and real estate is late to the game, mostly because of the lack of offer, but there’s tons of demand and we want to tap that market asap because its exponential growth curve just started, accelerated by the pandemic.
In a recent survey to luxury tourists by Conde Nast Traveller, Portugal ranked 8th in the world as the top destination these travelers want to visit after the pandemic restrictions, tourism in Portugal doubled since 2012 and in the midst of the pandemic, in 2020, luxury rentals in Portugal grew 13.2%. These are remarkable data points that lead us to believe the exponential growth phase just started.
How would you describe Portugal 88 Investment Fund’s risk profile: Conservative, Moderate, or Ambitious?
Although it’s a venture capital fund I would describe it as conservative but ambitious. Again, by starting from what customers (aka investors) want, we realized safety in their investment with good ROI is their key decision point, so we created a business plan that’s safe by investing in brick and mortar real estate but as the potential to deliver strong returns through short-term rentals in a high demand low offer market.
The Golden Visa rules state that a qualifying investment must be held for just five years but Portugal 88 Investment Fund’s lifetime runs for longer. Could you please explain the fund’s lifetime including the launch date and subscription period?
Only after investing they can start applying to GV, which could take 6 months. Then we have 5 years of GV holding and another 6 months of the citizenship process.
We gave it a bit of a buffer for investors which the processes drag further as well as the late investors can still go through the entire process. Thinking that from day 1 to citizenship is 5 years it’s a common mistake, often misled by representatives.
The Portugal 88 Investment Fund’s prospectus shows that you’re targeting acquisitions across a number of locations across Portugal. Could you please explain to us how you make your decisions on where to invest?
We have property profiles that cater to our market target in the luxury market, those are things like 3 to 4 en suite bedrooms, private parking, good location, uniquely beautiful, family-friendly, and many more characteristics. On top of that, we then need to make sure these are located in tourist destinations that have year-round demand, domestic and foreign as well as the price vs quality of the product is great.
Lastly, we designed the locations map from a local perspective, we know which are really the best places in Portugal in trend or to be in trend so we want our investors to also be able to enjoy those as the locals do.
In general, some investors are cautious because of the funds’ lock-in periods. How do you plan to deal with investors who wish to exit the fund before its full lifetime?
We can exit investors any time through replacement, our management regulations are also flexible to allow us to vote majority for earlier exits if that makes sense for the fund and investors ROI.
It seems that most Golden Visa funds in Portugal are focused on real estate. What distinguishes Portugal 88 Investment Fund from the others?
Portugal 88 combines the key points for a great investor experience, safety, good ROI, and experience. I spoke about the first two but what makes us absolutely innovative is the fact that we allow all investors to use any of the luxury properties in the fund for 14 days per year for free (pay only cleaning fee), so for 8 years, they’ll be staying with friends and family in >€2M luxury properties managed by a luxury operator.
Many of those considering the Golden Visa are currently comparing funds vs real estate. What advice can you offer to help investors make the right decision for them?
It comes down to the final goal in the investment. If someone already knows Portugal very well and wants to move here permanently then I would suggest buying a property. If an investor wants to get the visa at a lower cost, no hurdles, no headaches, with solid returns than the funds are the way to go.
For people who are unfamiliar with investing in funds and may even be nervous about learning, what advice would you like to give them?
The Securities Commission (aka CMVM) will protect investors in a way that no other governmental organization does, it’s absolutely safer to invest in a fund than in property. Having gone through the process I can say they really go the extra mile to make sure the fund is safe and the teams behind know what they’re doing.
Funds are highly regulated and scrutinized by CMVM. The key point is, if the investor believes in the business plan behind the fund then everything else is safer than any other option available in the market, in my opinion.
Considering the incoming Golden Visa rule changes on January 1st 2022, what advice would you give to investors who are currently looking into the program?
Just make sure you submit the application before December 31st at 23:59 [Laughs]. Make your investment decision before the end of October so you have plenty of time to apply.
What is your outlook for Portugal from both an investment and lifestyle perspective over the coming years?
When I first arrived in Singapore, in 2013, people used to ask me where Portugal is. Last year, I had a group dinner just before the pandemic where I was surrounded by 6 or 7 people asking me which area they should buy a house if they move there. These were not Europeans, they were Chinese, Singaporean, Indian, and other Asian countries.
Is there anything else you would like to share with potential investors?
If you’re looking for a lower cost entry-level for Golden Visa (residency by investment), no headaches, good returns, and an amazing experience during your GV tenure in Portugal, then you’re in the right place with Portugal 88 🙂