When an easy gateway for foreigners into Portugal became a nightmare for locals, the country had to move quickly.
It restricted its famous “golden visa” program as it set off a massive housing crisis that priced out Portuguese people. The expedited path to residency welcomed digital nomads but also more than doubled home prices in eight years and prompted protests due to exorbitant rents.
While Portugal is still recovering from the string of events that an influx of expats spurred, it isn’t closed to the idea of repeat tourists or short-term rentals—especially in the country’s second-largest city, Porto.
Famous for its historic sites and port wine, Porto has also experienced soaring interest among tourists and expats alike. Yet, the local government sees that as a boon to changing the city’s course.
“The repeating tourist is the best tourist we can have,” Rui Moreira, Porto’s mayor, told Bloomberg. “And that’s where we should focus our attention.”
His hope? Tapping on short-term rentals, such as those offered by Airbnb, as a way to regenerate the city and save it from possible ruin.
Moreira acknowledges that the city needs to be selective about where it allows or avoids such rentals, given Portugal’s Airbnb restrictions announced last year. Still, the rising tide of tourists could help change the city for the better.
Portugal is an easy sell for anyone looking to move there—warm weather, great cuisine, low cost of living, and, until recently, a relatively low barrier for entry. But golden visas have been contentious, with Portuguese political parties disputing whether or not it was instrumental in worsening the housing crisis.
Portugal isn’t alone in walking back its attractive residency route for the wealthy—Spain recently announced it would scrap its golden visa in a bid to make housing affordable again.
The rejigged program in Portugal now bans property as a route for investing in the country to gain residency rights. Will that help fix the broken housing market? It’s hard to tell just yet. In Spain, for instance, the golden visa scheme had little impact on the lack of housing, property website Idealista found.
Finding the balance
Portugal attracted a record-breaking number of tourists last year—up 19% from 2022 to over 18 million. Tourism is one of the economy’s key pillars, accounting for nearly 15% of its GDP.
Despite its significance to the country, the travel and tourism industry has been at the center of recent pains for locals struggling to find affordable housing.
“What we think is expensive, is cheap for them,” Moreira said of Portugal’s property crisis, referring to expats.
The mayor wants to diffuse the volume of tourists by encouraging them to visit the less sought-after areas and creating a stream of repeat visitors to the city. Unsurprisingly, it’s also meant more expats live in Porto now—but Moreira thinks they have “a very significant impact.”
“We’ve never been seeking to attract golden visas,” he said. “We’re not so much a city of retirees. We’re much more a city of young nomads who come here to work at these companies.”
Porto’s houses have become 32% more expensive in the last five years. It plans to invest €76 million in housing between 2022 and 2026, including building new homes and paying private homeowners to sublet their properties at lower rates.
“There isn’t a magic wand for the issue of housing,” Moreira said. “We have to find fair measures and various medicines.”
Airbnb didn't immediately return Fortune's request for comment.
