Important factors to consider in residence planning
Unprecedented and highly volatile global conditions triggered by the COVID-19 pandemic are driving high-net-worth individuals to reassess the concept of secure investment value and how best to safeguard their families and their wealth against future shocks.
The virus is devastating countries in rapid succession — from struggling developing nations to global giants, no nation is being spared. Against a background of significant projected instability, investors with foresight are already engaging in their post-pandemic planning and reassessing their wealth portfolios by opting to diversify via real estate–linked investment migration programs.
Leading international citizenship- and-residence-by-investment advisory firm Henley & Partners says before the World Health Organization announced the COVID-19 outbreak a pandemic, applications for Portugal’s popular Golden Residence Permit Program were on the rise. The first quarter of 2020 saw a 25% increase in interest in the program, with actual applications up by almost 50% compared to the same period in 2019. According to the latest Portuguese government data, 95% of Golden Residence Permit Program applicants have invested their funds in real estate as opposed to capital transfers or business, injecting approximately EUR 5 billion into the country’s economy over the past eight years.
Henley & Partners CEO Dr. Juerg Steffen says acquiring alternative residence or citizenship enables wealthy individuals to diversify their portfolios via a resilient investment solution, while at the same time contributing significantly to the economic wellbeing of the countries that offer programs. “Investment migration is a win-win solution for global investors and sovereign states alike. High-net-worth individuals favor European real estate-linked programs as they offer a unique hybrid investment opportunity that includes multiple yields from real estate, with all its traditional upside, as well as an alternative residence and/or citizenship with the option to relocate if they need too.”
In the recently published Henley Passport Index Q2 Update, FutureMap founder Dr. Parag Khanna predicts that the pandemic will prompt many to reconsider their global mobility options. “The combined effect of the COVID-19 pandemic on public health,the global economy, and social behavior may augur deeper shifts in ourhuman geography — and our distribution around the world. As the curtain lifts, people will seek to move from poorly governed and ill-prepared places to more proactive countries with greater resilience and better medical care.”
Real estate has traditionally been seen as an investment with staying power that demonstrates decades-long returns. Real estate–linked investment migration has the additional advantage of enhancing one’s options for relocation or retirement, or both. The potential gains from investment migration–linked real estate over the lifetime of the investment are trifold: the core value of the asset, rental yields, and global access as an ultimate hedge against market and political volatility.
Year-on-year applications for Cyprus’s real estate-linked investment migration program reveal an even sharper trajectory than Portugal’s, increasing by 250% in the first quarter of 2020 compared to the same period in 2019, generating substantial inflows of wealth and, more significantly, job creation across the socio-economic scale for the country.
Dr. Steffen foresees that once the COVID-19 crisis has been curbed and travel restrictions lifted, global mobility and international access will continue to be essential hedges against asset-value volatility and wider market challenges. “Real estate-linked investment migration is a long-term proposition that over and above the obvious benefit of providing a home in an alternative location of your choice, secures access to new markets, top educational institutions, more secure healthcare systems, and a suite of investment and personal opportunities for both present and future generations.”
Dr. Steffen concludes that real estate-linked investment migration programs, especially in Europe, are a reliable back-up plan for turbulent times, providing investors with unparalleled safety, security, stability, and opportunity, including access to major money markets. “At this time, when markets are being dealt heavy blows, it is vital to remain calm and make strategic long-term decisions. As a tried-and-tested hedge against volatility, securing alternative residence or citizenship through property purchase is one of the safest, smartest, most sustainable investments you can make right now.”