In spite of safety concerns and travel restrictions, the market for so-called “golden visas”—programs that grant citizenship or residency to foreign nationals who make significant investments in a country, often in real estate—has thrived during the Covid-19 pandemic, with high-net-worth global buyers eagerly seeking out both physical and financial safe havens.
“Clients are diversifying,” said Andres Gutierrez, an investment immigration consultant with CSB Group in Malta. “In a pandemic, clients have realized that [citizenship by investment regulations] give an edge against geopolitical risk and volatility. They want investment stability, they want options for their children.”
With economies across the globe suffering from the ongoing fallout of the pandemic, some governments have also expanded their visa offerings over the past year to make up for lost tax revenue, a phenomenon also seen in the wake of the 2008 financial crash.
Since 2012, Portugal has been home to one of the more popular and well-known golden visa programs, launched to attract investment and tax dollars to struggling markets in Lisbon as well as smaller cities. The policy was an overwhelming success, attracting more than €5 billion (US$6.10 billion) in investment over the past eight years.
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But the program was perhaps too effective at driving up prices and demand, and in early 2020, Portugal’s government recommended that golden visas should no longer be available to investors buying in Lisbon and Porto. The move is designed to tamp down speculation and keep prices accessible in the nation’s major cities, as well as to encourage investment in lower-density parts of the country.
In response to the pending restrictions, Chinese investors have been rushing into the Lisbon market throughout the year in order to secure investments while they still come with citizenship benefits. But heading into the new year, would-be investors in Portugal may want to start considering their options elsewhere.
“Portugal’s appeal and why it’s done so well is partly lifestyle and culture that’s particularly appealing, and values in Lisbon were pretty competitive compared to other European markets,” said Kate Everett-Allen, the head of international residential research at Knight Frank. “In terms of other markets, it’s quite striking how many there are.”
Investment thresholds, fees, taxes and red tape for golden visas vary enormously by country, but for investors who may have been eyeing Portugal’s market, options in the Caribbean islands and southern European countries may offer the most promising alternatives with a coveted mix of mobility, lifestyle and safety for investors.
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Malta
Portugal is hardly the only nation considering new restrictions on its investment-by-residency programs.
In October, the European Commission threatened both Cyprus and Malta over their respective golden visa regulations, and Cyprus’s program was suspended following an Al Jazeera documentary that showed Cyprian politicians agreeing to aid a fictional foreign businessman with a criminal record.
“There’s this kind of trade-off going on between local governments who want to be able to attract investment and boost their economies, and overarching bodies like the European Union trying to keep a close eye on market transparency,” Ms. Everett-Allen said.
Malta’s regulations currently still allow paths to residency and citizenship for investors, with painstaking due diligence and background checks, Mr. Gutierrez said. Malta also offers a significant logistical advantage for investors looking to buy in the midst of a pandemic.
Unlike other countries where investors apply for residency after the purchase of a property, in Malta, the application happens before the purchase, meaning there’s less uncertainty around the initial investment, and crucially, that buyers can begin the process without having to travel to visit a property first.
“Once the application is approved is when the applicant has to travel,” Mr. Gutierrez said. “There are many clients we have been advising that have started this process in the pandemic. There are a lot of things they can do while they’re at home.”
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In order to qualify in Malta, buyers must contribute €650,000 (US$791,405) to a national development fund and make €150,000 in government-approved investments, in addition to a €350,000 property purchase.
The program is one of the more expensive options in Europe, but offers a clear path to a Maltese passport, and a foothold in the EU, a factor that holds significant appeal for families relocating from abroad.
“If you’re a non-EU purchaser and want your child to maybe attend university in the EU, you now have the ability for your child to move around studying,” Ms. Everett-Allen said. “You’ve got that sort of bonus.”
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Spain
For foreign investors, Spain’s appeal is similar to that of Portugal or Malta in terms of both lifestyle and flexibility of movement within the European Union. It also offers a high level of stability in terms of governmental and financial infrastructure, as well as brass tacks logistical convenience.
“Outside of Lisbon and Porto, we’re talking about small cities with not very good [transportation] connections,” said Alejandra Vanoli of VIVA Sotheby’s International Realty in Spain. “In Spain, you have excellent connections flying to Madrid, or on the coast, Levante, Seville or Andalucia.”
The citizenship process for investors is longer than in many countries, however, and after their initial minimum property investment of €500,000, buyers must wait 10 years to be able to apply for citizenship. The lag time doesn’t seem to have slowed interest from buyers.
“Last year was a record for golden visas, we had 8,000 people who bought properties with the idea of creating a permanent residence here,” Ms. Vanoli said. “They’re looking at the advantages. You don’t have to live here 180 days a year [as required by some visa programs], and you have the chance of sending your children to many international schools, whether that’s French, American or British. It’s really very convenient.”
Spain’s investment market may see a further influx of interest early next year after the deals of the U.K.’s exit from the European Union are finalized.
“We’re still waiting on confirmation on this, but after Brexit on Jan. 1, British citizens will be non-EU residents and therefore could potentially apply for golden visas for the first time,” Ms. Everett-Allen said. “We could see more interest in markets like Spain that are particularly popular with British second-home buyers.”
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Montenegro
For buyers willing to consider options that are technically outside the European Union, Montenegro’s citizenship by investment options have been growing in popularity since they were introduced in 2019.
(Montenegro is a part of the Eurozone, and is a candidate for future EU membership in 2025. Currently, a Montenegrin passport allows for travel to 125 countries, including those in the EU Schengen Area.)
The Balkan nation represents a relative bargain compared to other many other golden visa programs, with an opportunity to obtain a Montenegrin passport within three months of purchasing a €250,000 property in a government-approved development project in the northern mountain region, or a €450,000 property in a development project on the coast. (In both cases, buyers must pay an additional €100,000 government fee to qualify, on top of other assorted application fees and expenses.)
“Life costs are much cheaper here than in the European Union, and you’re getting a lifetime citizenship,” said Niko Laković of Montenegro Sotheby’s International Realty. “It’s a very beautiful lifestyle and we’re a maximum two-hour flight from major European cities. And you’re getting an actual passport three months after starting the process.”
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Cayman Islands
Outside of the European market, numerous Caribbean islands offer popular residency programs, and the Cayman Islands remain the gold standard both in terms of lifestyle and financial convenience.
“There’s no restriction at all to foreign ownership of land here, whereas there is some in European nations,” said James O'Brien of International Realty Group Ltd., an affiliate of Luxury Portfolio International in the Cayman Islands. “And obviously there’s no direct taxation at all, whether that’s property taxes, personal income, inheritance. It’s very difficult to find any jurisdiction that ticks all the boxes that the Cayman Islands does.”
The Cayman Islands currently offer two paths to a certificate of permanent residency for investors, the most popular of which requires a property investment of at least $2.4 million in any of the three Cayman Islands, Mr. O’Brien said.
“That certificate of permanent residency will give you a path to Cayman citizenship,” Mr. O’Brien said. “Five years from the time you’re granted residency, you can apply and become a Caymanian citizen, which entitles you to a British Overseas Territories passport. That’s been very appealing to investors from the U.S. and Canada, as well as Asian and Middle Eastern investors.”
The second option requires a lower overhead investment of a $610,000 property purchase as well as certain financial investments and a minimum annual income, but only confers a 25-year renewable residency certificate, Mr. O’Brien said, with no path to citizenship.
“It’s a little bit more complicated in terms of what you need to have invested, but in simple terms, it’s half the dollar entry value of the [certificate of permanent residency] program,” Mr. O’Brien said. “The residency certificate allows you to reside in the Cayman islands, but very importantly, you cannot work, and you can never become a Cayman citizen or British Overseas Territories citizen.”
With ease of travel to the U.S. and London, as well as a strong local economy, infrastructure, and education system, the Cayman Islands offer many of the same benefits sought by buyers in Europe.
“We have great connectivity to the mainland in both Canada and the U.S., and Miami is less than 90 minutes away,” Mr. O’Brien said. “We’ve also got direct nonstop flights to London and sophisticated infrastructure. Quality education is one of the real key things that’s attracting full relocation for high-net-worth families, as well.”
While no two countries have residency programs that are exactly alike, savvy buyers can start to identify key features in potential investments and assess their options accordingly.
“It comes down to personal preference, ultimately, and lifestyle is critical,” Ms. Everett-Allen said. “It’s often also an insurance option, and there’s been a large increase in American applications for second passports over the last few months. It’s a backup plan to have greater mobility, diversify assets, and have something in the back pocket to make use of and be able to move more quickly.”
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