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Residence and citizenship by investment

By Yiannos Trisokkas, Henley & Partners, Managing Partner, Cyprus

Investing in property has always been a responsible and reliable way of protecting and increasing one’s wealth, one that comes with the added benefit of providing a home (or even a second or third one, as the case may be) or an ongoing source of income in the form of rental capital.

In recent years, however, other forms of investment gained in popularity and are geared towards protection of a different nature — the protection of one’s freedoms, family, and future. These forms of investment are broadly termed residence- and citizenship-by-investment and — through the exchange of capital for residency or citizenship rights in an alternative jurisdiction — amount to a robust insurance policy against the ever-unpredictable occurrences of the 21st century.

For prospective investors trying to decide whether to should invest in property or alternative residence or citizenship options, the exciting news is that through residence- or -citizenship-by-investment, one can very easily do both. In fact, with the property market in Europe currently flourishing, and many investment migration programs having relatively low barriers to entry, deciding on both options is now as safe and sensible an investment as one is likely to make.

An attractive range of options in Europe and beyond

There are dozens of countries that offer residence-by-investment (RBI) or citizenship-by-investment (CBI) programs, with a significant number being in Europe. With Britain’s withdrawal from the European Union imminent, this may come as especially good news for those concerned about maintaining reliable access to Europe’s entire Schengen Area. For instance, Greece, Ireland, Portugal, and Spain all offer RBI programs, while Moldova and Montenegro offer CBI programs. The Mediterranean islands of Cyprus and Malta offer both. Further afield, the Caribbean also offers several CBI programs and has long been a popular destination for investors looking to diversify their property and residence portfolios outside of Europe.

Here is how it works: in exchange for a real estate purchase above a certain threshold (depending on the specific terms of the country), as well as application processing and due diligence fees, an investor may acquire both a prime property in a superb location and a full permanent additional residence and/or citizenship. Of course, permanent residence in Europe comes with the added benefit of granting automatic full visa-free access to all the other European member states, but thanks to generous visa-waiver agreements with former commonwealth nations, this benefit is not exclusively limited to European countries. All round, not a bad return on investment if one were looking to purchase property anyway.

Access to Europe has never been simpler

Property-linked residence- and citizenship-by-investment programs offered by European countries have been on investors’ radars for a while. Well over half of EU member states now have residence-by-investment programs, most linked to property investment. These countries are popular because they allow EU residence and freedom of travel within the Schengen Area.

To the far west of Europe, Portugal has proven to be an extremely attractive option. The country has experienced constant growth over the past five years, with a range of investors entering the market and discovering numerous valuable opportunities. Investment strategies targeted at foreign investors, such as the Portugal Golden Residence Permit Program and the tax-related non-habitual resident (NHR) regime, have had a strong impact, alongside the impact made by prominent international developers who are redirecting their investments from other key European markets. Indeed, the domestic market has blossomed, with banks now actively offering more competitive conditions on mortgages. As we approach the third decade of the millennium, the housing market will continue to grow, with Standard & Poor’s predicting house price growth of 9.5%, slowing to 5% by 2021. To qualify for the golden residence permit, minimum property investment options currently begin at EUR 350,000.

Deeper into the Mediterranean, Greece also offers a popular residence option known as the Greece Golden Visa Program. For a minimum real estate investment of EUR 250,000 plus the relevant taxes, applicants can secure an indefinitely renewable residence permit that can lead to full citizenship after a period of seven years. Residence permits are normally issued within 30–60 days of a successful application and, with no obligation to actually reside in Greece, investment property can easily be put on the rental market for the duration of the investment period. With a residence permit, investors and their families have the freedom to live in Greece and travel throughout the European Schengen Area visa-free.

Offshore, Malta and Cyprus remain hugely popular thanks to their respective investment migration programs. For the Malta Residence and Visa Program, the minimum property investment begins at EUR 270,000, while the most affordable qualifying investment for the Cyprus Permanent Residence Program starts at EUR 300,000. According to Knight Frank, the Maltese real estate market is currently one of the most lucrative in the world. In fact, the price of property in Malta has increased by 17% in the past 12 months alone. In Cyprus, demand is now rising sharply — during the first three quarters of 2018, property sales rose by 21% from 2017, according to figures released by the Department of Lands & Surveys.

Exciting possibilities also exist in the emerging markets to the east, where Moldova, which recently introduced its brand-new Moldova Citizenship-by-Investment (MCBI) program, is looking to attract new wealth and talent in exchange for highly competitive investment thresholds. The MCBI program grants visa-free or visa-on-arrival access to countries within Europe’s Schengen Area, Russia, and Turkey, among others. A minimum property purchase is not required to secure full citizenship, although applicants must pay a non-refundable fee of EUR 100,000 (exclusive of processing and due diligence costs). Thereafter, the cost of property is relatively low cost (approximately EUR 900 per square meter for an apartment in the center of the capital city Chişinău).

The Caribbean — an emerging real estate hub with benefits

With its stunning geography and gorgeous views, the Caribbean makes a superb alternative for investors seeking residence outside of Europe. Moreover, thanks to a suite of highly attractive CBI options, many of the Caribbean islands also offer citizenship along with property purchases upwards of a certain value.

For example, the southern Caribbean nation of Grenada was one of the most popular tourism and real estate investment destinations in the region for 2018. The island’s profile was raised by the phenomenal growth it experienced in its tourism sector, exposing buyers to its charm and unique beauty, from pristine beaches to breathtaking rainforests and waterfalls. In addition, according to the Grenada Tourism Authority, the country’s stock of hotel rooms is to expand by 26% by the year 2020. This real estate expansion will lead to greater real estate investment opportunities that will further enhance Grenada’s tourism and real estate value. Much of the growth in the hotel pipeline can be attributed to the success of the Grenada Citizenship-by-Investment Program, as well as to recent infrastructure improvements. Investing in property in Grenada starts at USD 350,000, which includes residence and citizenship rights, unlocking visa-free or visa-on-arrival access to 143 countries including the entire Schengen Area, China, Hong Kong, and Singapore.

For investors interested in acquiring real estate in St. Kitts and Nevis, there are a wide variety of options to choose from, including villas and condominiums, gated residential communities, resort communities, residential lots in developments, and large acreage for development. The St. Kitts and Nevis real estate market has remained robust in recent years due to the vibrancy of the twin-island nation’s CBI program. Here, the general trend in property prices is upward, with the minimum property investment for the St. Kitts and Nevis Citizenship-by-Investment Program starting at USD 200,000. Considering the excellent prospects for capital gains and the vibrant market for vacation rentals, an investment in St. Kitts and Nevis real estate will no doubt generate positive returns in the future. There is also considerable demand in the market for previously owned properties.

Finally, the island nations of St. Lucia and Antigua and Barbuda also offer fantastic value for property investors in search of more than just bricks and mortar. For a minimum real estate investment of USD 300,000, the St. Lucia Citizenship-by-Investment Program offers citizenship and visa-free or visa-on-arrival access to 145 destinations. Antigua and Barbuda, which offers investors a real estate option beginning at USD 400,000, provides investors with access to citizenship and visa-free or visa-on-arrival access to 150 different countries. Both nations’ passports grant access to the entire Schengen Area, Hong Kong, and Singapore. Due to its popularity among real estate speculators and investors, Antigua and Barbuda in particular already boasts a booming real estate market and robust construction sector.

A wise property investment that also brings you peace of mind

Around the world, foreign governments are responding to the ever-increasing mobility of high-net-worth individuals by coupling property investment opportunities with sought-after residence or citizenship rights. As a result, the rise of global property investment is expected to increase in the year ahead, with more investors looking to buy property overseas, especially in Europe’s real estate hotspots such as Cyprus, Malta, and Portugal.

However, as demand and supply increase for these programs, so too does the regulation necessary to keep the investment migration industry clean and well-managed. One consequence of this is that, following scrutiny from the European and UK parliaments, certain programs are adopting more stringent procedures and longer application times as we move into the future.

In short, the time to invest in property abroad is now. As many investors have already demonstrated, investing in property is smart, but investing in property that comes with the invaluable bonus of second residence or even European citizenship, is smarter.

About Henley & Partners

Henley & Partners is the global leader in residence and citizenship planning. Each year, hundreds of wealthy individuals and their advisors rely on the firm’s expertise and experience in this area. Henley & Partners also runs a highly successful government advisory practice that has raised more than USD 8 billion in foreign direct investment. The firm has been involved in strategic consulting and in the design, set-up, and operation of the world’s most successful residence and citizenship programs.

henleyglobal.com

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