Not too long ago, Bruno de Carvalho used to pay €8 ($8.60) for a meal at a Portuguese restaurant across the street from his office in central Lisbon. Now a South American tapas and ceviche joint has taken its place, where a degustation menu costs almost 10-times as much.

It’s one of the signs of rising wealth and changes sweeping Portugal’s booming capital, according to the 62-year-old local country head for Swiss private bank Edmond de Rothschild, as a wave of affluent foreigners flock to the Iberian nation, lured by its sun-soaked beaches, tax breaks and a golden visa program. Though some of those incentives are being rolled back, they remain available to rich applicants and continue to draw well-healed expatriates.

The influx has meant more competition for Carvalho, with new rival private banks entering the market and triggering a talent war. This year alone, Credit Agricole’s unit Indosuez Wealth Management and Swiss-based Union Bancaire Privée opened their offices in the city. Zurich-based Julius Baer Group also plans to expand to Lisbon next year, Bloomberg News reported recently. 

While it’s well known that wealth management is a growing business for many large banks around the world, the decision by at least three established European players to open offices in Lisbon in the space of one or two years points to the significance of the inflows into the $286 billion economy and the country’s appeal for rich migrants.

Henley & Partners, an immigration consultancy, estimates that more than 800 high-net-worth individuals with investable wealth of $1 million or more moved to Portugal in 2023, making it one of the top 10 destinations for migrating millionaires. Government data show the number of foreign residents last year jumped 33% to a record 1 million, accounting for about 10% of the population.

“Our operation in Lisbon is very recent, but we expect to double our existing business very soon,” said Nuno Vilar Gomes, who recently relocated from Luxembourg to head a team of 10 people at Indosuez in Portugal.

Local Wealth
About 25 years ago, when Carvalho and his small crew of private bankers set up Edmond de Rothschild’s operations in Portugal, their main competitors were just domestic banks that also offered wealth management services.

At the time, most of the wealth was concentrated in the hands of a few local clans. These included the Amorim family, whose businesses range from oil to cork; the Soares dos Santos family, which controls retailer Jeronimo Martins; and, the Mello family, which holds stakes in several companies including highway operator Brisa.

Now the competition is intensifying. Offices of many of the new private banks are popping up along the city’s Avenida da Liberdade, a boulevard filled with luxury shops and restaurants that’s considered the Champs-Elysees of Lisbon. These new entrants will be jostling with Portuguese, Spanish and most recently Brazilian banks like BTG Pactual that already have local offices.

“Portugal offers unique advantages and opportunities for both local and expat investors” and there’s more wealth available in the hands of both the groups, Luis Cabral and Marcos Milhazes, the co-heads of UBP in Lisbon, said in an emailed response to questions. “We target both alike.”

UBP is already familiar with the Portuguese market because it bought Banco Comercial Portugues’ Swiss private bank in 2021. The opening of UBP in Lisbon earlier this year was the “next logical step,” said Cabral and Milhazes. At a press conference last month, BCP’s Chief Executive Officer Miguel Maya said private banking is “quite an important area” where there’s already “enough competition.”

Talent War
With firms such as Edmond de Rothschild and US-based AlTi Tiedemann Global, which has an office in Lisbon, looking to increase their headcount of advisers, a war for talent is also brewing in a market with a limited supply of private bankers.

“The problem is there’s little talent available and the market isn’t very liquid,” said Carvalho.

The French were some of the first affluent foreigners to move to Portugal about a decade ago to take advantage of government incentives, followed by rich Brazilians eager to live in Portugal and travel freely across many European Union countries. At present, there’s a wave of arrivals from Canada and the US, said Indosuez’s Gomes.

The golden visa program has been one selling point. Earlier, it required an investment of as little as €350,000 in local real estate, but now non-EU investors need to buy a stake in a fund that funnels money into property.

Under the non-habitual resident program, the government previously offered a flat income-tax rate of 20% and 10% levy on pensions for 10 years, but it has stopped accepting new applications this year. But those who applied before 2024 will have those benefits until the 10-year period runs out.

Though Portugal has scrapped the non-habitual resident program, limited golden visas and is tightening requirements for some immigrant workers, most private bankers believe affluent foreigners will continue to arrive to enjoy the security and business opportunities offered by the country, not to mention the warm climate.

Hottest Market
The inbound rush of money has helped turn Lisbon — once a real estate backwater dotted with old buildings — into one of Europe’s hottest property markets, while also pricing out many local families from the city center. In a 2023 report, the National Statistics Institute said that some foreigners are willing to pay more than twice as much as domestic buyers for a home in Lisbon. Reservations at some of the best restaurants in the capital are notoriously hard to book and waiting lists for some international schools can stretch for years.

That interest has spread to other locations, including the once-sleepy beach resorts of Comporta and Melides. French fashion designer Christian Louboutin recently opened a five-star hotel in Melides, which is about 75 miles south of Lisbon.

Edmond de Rothschild’s Carvalho isn’t too worried about the competition, though he misses the time when Lisbon was affordable to most people.

“The country has internationalized itself,” said Carvalho, whose foreign clients account for about a fourth of his customers. “There’s no going back.”

This article was provided by Bloomberg News.