Diverse climate, fertile soil, organic and sustainable production. The attractions of the Portuguese agricultural sector make it one of the most lucrative areas of investment in the country. Let’s look at some of these aspects.
Portugal, despite facing challenges in water management, has demonstrated notable hydrological advantages compared to other European countries, whether natural or artificial.
In 2020, Portugal’s water stress index was 12.7%, well below the European Union average, which stood at around 20%. Water stress occurs when water demand exceeds available supply.
The Portuguese nation not only boasts abundant natural waterways like the Douro and the Tagus but also reservoirs like Alqueva, the largest in Western Europe. With a capacity of 4150 hm³ of water, it not only generates electricity but also irrigates 110,000 hectares of land.
Moreover, given global projections on food demand and production, the agro-industrial sector will become an increasingly crucial business. By 2050, the world’s population is expected to increase by 35%, reaching 10.5 billion people. To meet that demand, agricultural production must double during the same period; some argue it needs to increase by 70%.
“The agri-food sector has become an object of desire for venture capital funds and large fortunes, both for its profitability and as a refuge from market volatility,” states the Spanish agricultural portal Cocampo. According to 2022 figures, in just the first quarter of that year, over 200 investment funds entered this market in the Iberian Peninsula.
Although Portugal is traditionally known for its high-quality wines, cork industry, and olive oil, today the offerings are broader: almonds, walnuts, table grapes, mandarins, kiwis, etc., are produced in regions like Algarve, Alentejo, Coimbra, and the Alqueva area.
One characteristic of agricultural investment is its stability. Agricultural asset yields have been positive every year since 1990. On average, they achieved a 11% total annual return between 1992 and 2020, outperforming all other asset classes.
Tax benefits should also be considered. Some agricultural investment funds are exempt from both Profit Tax and Corporate Tax.
If your ultimate interest is obtaining the Golden Visa, consider that an investment in funds from €500,000 is perfectly compatible with this visa program.
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