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Dominic Volek is Group Head of Private Clients and a Member of the Executive Committee of Henley & Partners.
As expected, 2022 is proving to be another year of extreme volatility. In this transitional period, as many economies move into a post-pandemic phase that is plagued by security, political, and economic risks, wealthy families are revisiting their priorities to ensure their legacies, wealth, and lifestyles are protected. But failure to prepare is preparing to fail — a truism made famous by Benjamin Franklin — and for high-net-worth investors, securing the freedom to choose where in the world they want to travel, live, study, invest, and retire is now a prime concern. Henley & Partners processed applications for clients representing 48 different nationalities in the first quarter of 2022, and as our Q1 web enquiries data reveals, interest in investment migration continues to rise as more and more investors explore residence and citizenship by investment programs that offer them the peace of mind, risk mitigation, optionality and travel mobility they desire.
Historically, a large number of wealthy individuals have acquired residence rights or citizenship of additional countries without moving to those countries. The high-net-worth migration figures in the Henley Global Citizens Report 2022 Q2 focus only on people who have truly moved — namely, those who stay in their new country more than half of the year — and are therefore on the conservative side. Recent turmoil is causing this to shift, however, and more investors are considering moving their families to other countries for a range of reasons, from safety and security, to education, to healthcare, and even crypto-friendliness. It is interesting to note that nine of the Top 10 countries for high-net-worth individual inflows in 2022 host formal investment migration programs, which encourage foreign direct investment in return for residence or citizenship rights.
The first three months of the year have been record-breaking for Henley & Partners in terms of global demand for investment migration offerings, with the highest quarterly number of web enquiries ever received, and astonishing growth of 55% on the previous quarter. The bulk of the enquiries are made by Asian investors, with South Asia predominating in the region. This is largely driven by Indian nationals, with Pakistan and Bangladesh the second- and third-largest South Asian markets for enquiries in Q1. In terms of sales, India and Pakistan ranked in the top 10 globally, as did the Philippines.
The most popular program Indian and Pakistani investors and entrepreneurs are asking about is the Portugal Golden Residence Permit Program, which retains first place globally in terms of both sales and interest in 2022. Portugal is closely followed by Canada in terms of popularity among Indian and Pakistani investors. Canada offers several pathways to permanent residence, but the fastest way for entrepreneurs and wealthy individuals to access Canadian residence and the North American market is via the Canada Start-Up Visa Program. For a minimum contribution of USD 275,000, successful applicants can acquire a work permit within a short time or permanent residence within one to three years.
Indian tech entrepreneurs are also showing significant interest in Australia, and the Global Talent Independent Program in particular, which is unique among global residence programs with its fast-track path directly to permanent residence in a leading country without the need for any form of investment. Applicants must have an international reputation in their field and meet Australia’s health and character requirements. Australia has granted more than 17,000 Global Talent Independent visas in the past two years, and the program is attracting a great deal of attention among our clients. However, the Global Talent Independent Program is likely to be subject to a review in next six to twelve months in the wake of the change in government with the recent win by new prime minister, Labour Party leader Anthony Albanese, and future changes cannot be ruled out.
Enquiries from African investors are also continuing their growth trajectory in 2022. Our Africa Wealth Report 2022 was launched in Q1 and generated a remarkable amount of interest, showcasing the immense potential on the continent, where private wealth is set to rise by 38% over the next decade. Investors from all over Africa are embracing investment migration as a means of enhancing their global mobility and mitigating regional risk. The most enquiries in Q1 came from Nigerian investors, followed by South Africans and Algerians. South Africa has been an established investment migration market for several years, but Algeria is an exciting new growth market. By 31 March 2022, we had received 63% of the total 2021 enquiries from Algerian nationals.
Nigerians are most interested in Canada, which offers excellent business and education opportunities, with the St. Kitts and Nevis Citizenship by Investment Program being another top contender. Many private clients from across the globe are keen to fortify their alternative citizenship portfolios by investing USD 200,000 in real estate in the dual island Caribbean nation or donating USD 150,000 to its Sustainable Growth Fund. With a processing time of three to six months (and a unique 45-day fast-track option), eligible applicants acquire a second citizenship that grants them not only business travel and lifestyle advantages but also acts as a safety net. Should the fiscal and economic policies in their home countries ever pose a threat to their financial security and business legacy, the investment can safeguard their capital by giving them the option of an additional nationality.
South Africans continue to favor Portugal the most, but the Mauritius Residence by Investment Program is also attracting a great deal of interest. The Indian Ocean island offers a similar lifestyle and climate to South Africa, along with a dynamic economy, attractive tax regime, and competitive business landscape not too far from home.
Another region consistently showing high interest in investment migration is the Americas, with US citizens being in the top three nationalities globally in terms of both sales and web enquiries we received in Q1, and Canada in the top five for sales and the top ten for enquiries. Both countries have been concerned about wealth tax reform for some time, and no doubt interest will remain high until decisions are made. Sales and enquiries from Americans are at consistent levels with 2021, which was a record year for us in terms of interest from Americans. In Canada, both sales and enquires are on the rise this year, with Q1 2022 sales already 66% of the full 2021 year. Interest is also higher in most Latin American countries, and particularly in Cuba, where we received double the number of 2021 enquiries in Q1 2022 alone. The country is confronting an economic crisis, with runaway inflation, and critical food and medicine shortages.
Like investors from many other countries, our American clients are particularly drawn to the Portugal Golden Residence Permit Program and the citizenship by investment programs offered by Antigua and Barbuda and St. Kitts and Nevis, in part thanks to their hospitable approach to tech and cryptopreneurs. In 2020, Antigua and Barbuda passed forward-thinking legislation to position itself as one of the Caribbean’s tech hubs. Its Digital Assets Business Bill enables techpreneurs with digital asset businesses, exchanges, wallets, service providers, financiers, and lenders, to be licensed and establish themselves in the dual island nation. In the same year, in a bid to adapt to innovation in the financial service sector, St. Kitts and Nevis passed its Virtual Asset Bill, creating a framework for entrepreneurs to license their blockchain or crypto businesses.
Another interesting new trend in the USA is Americans’ rising interest in the Spain Residence by Investment Program. One way to acquire Spanish residence is by investing in real estate with a minimum value of EUR 500,000. Spain offers a vast and attractive real estate market and ranks 2nd in Henley & Partners’ Best Investment Migration Real Estate Index. A single property investment will bring investors and their families multiple returns including extended personal access rights as residents of an EU country — which is a legacy investment for generations to come. And while there is a comparatively lengthy wait of 10 years of residence before being able to apply for citizenship for many investors, citizens of 22 Ibero-American countries as well as of Equatorial Guinea and the Philippines can apply after just two years.
Russia’s invasion of Ukraine has shaken the confidence of Europe-based investors, and we are seeing more enquiries in 2022 as a result, with the very real benefits of domicile diversification being highlighted. By far the most enquiries in this region continue to be received from UK citizens, followed by Turkish, but there has also been a significant uptick in enquiries from Germans (60% of total 2021 enquiries received in Q1 2022), the Netherlands (45%), and Switzerland (41%).
The Mediterranean residence by investment trio of Portugal, Greece, and Spain are attracting the most attention from the Brits, and in that order. All three countries offer a great lifestyle, attractive real estate options, and visa-free travel across Europe’s Schengen Area — a big post-Brexit drawcard now that travel is back. Wealthy individuals and expats who choose to relocate to Greece under the Greece Golden Visa Program also benefit from numerous tax incentives. Golden Visa investors who decide to transfer their tax domicile can pay a lump-sum tax of EUR 100,000 for 15 years, regardless of their foreign-sourced income, which has attracted many high-net-worth individuals to Greece.
Portugal offers a flexible Golden Residence Permit and a favorable non-habitual-resident tax scheme. Golden Residence Permit holders who opt to relocate to Portugal can obtain a 10-year tax exemption on most foreign-sourced income in addition to enjoying zero wealth taxes and exemptions on gifts to their families. Added to that, as Portugal does not currently apply VAT or income tax on cryptocurrencies, cryptopreneurs and affluent individuals have been drawn to this Iberian hub of innovation. In late May, Portugal’s congress rejected two bills that would introduce heavy taxes on crypto gains for individuals. However, the Socialist Party, which gained a majority in January’s parliamentary election, is looking to undertake a comprehensive review of tax legislation soon, and the finance minister has indicated that the country will move forward with the taxation of crypto.
One region that has seen a dip in interest in outbound investment migration in 2022 is the Middle East, which is energetically positioning itself as the world’s new wealth hub. Several countries have been renewing legislation in a targeted bid to attract skills and wealth in the past year, with the UAE leading the way and coming out on top in 2022 in terms of having the biggest net inflow of millionaires at 4,000.
With six months left of 2022, much could still change. The world as we have known it for decades has rapidly been upended, as have our production, distribution, finance, and energy systems. What the new world order will look like remains to be seen, but what we do know is that building resilience is key, and investment migration can help you create the necessary optionality to mitigate future risks and take advantage of new opportunities.
Henley & Partners assists international clients in obtaining residence and citizenship under the respective programs. Contact us to arrange an initial private consultation.
