LIO GLOBAL

Plan B’s golden ticket

Wealthy locals are accelerating their ‘Plan B’ options and many are using property as a means of achieving this, investing in offshore property to acquire residency or citizenship of another country.

Citizenship-by-investment (CBI) and residency-by-investment (RBI) programmes have spiked in the last decade. Offering foreigners the ability to live, work and travel in countries other than their own, these ‘Golden Visa’ programmes have become a huge source of revenue for many countries.

Malta’s CBI programme has brought a large amount of new wealth onto the island and has been credited with fuelling its strong growth in several key sectors, including financial services, IT and real estate, New World Wealth reports.

South Africans favour programmes offered by Portugal, Grenada, USA, Malta and Mauritius.

Nadia Read Thaele

Nadia Read Thaele, managing director of LIO Global, a specialist second residency and citizenship by investment firm, says Grenada is popular for its access to the E-2 visa, ease of programme and visa-free travel, the USA EB-5 for immigration, and Malta for a move there or EU (European Union) residency requirements. Over $3m in real estate investment has been concluded over the past three months by South Africans taking up these programmes, she says.

And now it is not just HNWI’s (high-net-worth individuals) accelerating their backup plans. “The range of clients is diverse,” Read Thaele tells finweek, “from ultra-HNWI’s to the middle class also starting to grow.”

As more affordable programmes are introduced, the less wealthy too are starting to take an interest, Chris Immelman, head of Pam Golding International tells finweek. And they are especially interested in Portugal’s programme that now allows investment from €280 000, he adds.

Portugal’s Golden Visa Programme is still the most popular by far for RBI-seeking South Africans, states Immelman. The programme, which provides access to EU countries, permanent residence and a path to citizenship, offers a straightforward €500 000 property investment, a €350 000 investment into a property requiring renovation, and its recently introduced €280 000 rural regeneration investment option. PGP has already assisted around 380 SA families to enter Portugal’s Golden Visa Programme. Many applications are still in the process with investments still due, however, processed value already totals €105m.

Mauritius also recently introduced a more affordable RBI programme. Permanent residency through real estate is now accessible from $375 000 and includes the right to work, open a business and even bring ones parents to the island.

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“Benefits, apart from low tax rates of around 15%, are no housing or property tax, no inheritance tax on properties purchased and no capital gains tax.”
— Chris Immelman, head of Pam Golding International

PGP reveals it has sold about 700 units to South Africans looking for a strong offshore investment to use as they get older and also pass down the permanent residency component to their children.

On to the US, where another $21m has been added to the offshore investment pot by 51 SA families whose EB-5 programme applications have been facilitated by PGP. The EB-5 investment threshold is $900 000, with citizenship possible after five years of living in the US. 

Grenada’s property-linked CBI programme has seen a massive 120% increase in applications from South Africans compared to last year, says Read Thaele.

Immelman confirms assisting 36 SA families to acquire citizenship in Grenada, an investment value of $11m.

The Caribbean island offers the cheapest way to full citizenship, accessed through a property investment of $220 000 (around R3.6m). Grenada’s CBI programme offers visa-free travel to 143 countries, including the EU Schengen area, UK, China, Singapore and Hong Kong. And there’s no requirement to live on the island.

There’s another major drawcard. Grenada is one of the few countries with both an active CBI programme and a bilateral investment treaty that allows one to live and work in the US via the USA E-2 Treaty Investor Visa programme, says Read Thaele.

But not all citizenship programmes are making headlines for the right reasons. Following allegations of corruption, in October Cyprus suspended its golden visa programme. Like other European countries offering CBI programmes, Cyprus’s ‘golden passport’ allows holders visa-free travel throughout the EU.

“It puts these [citizenship] programmes in the spotlight,” says Immelman. “We believe Malta will come back because their screening process is very, very thorough.” In September, Malta replaced its citizenship programme with a normal investor visa residency programme. “We don’t think Cyprus will come back.”

“Cyprus has always had a bit of a reputation, however; generally the due diligence required in other countries is substantial and will not allow investors of questionable character access. Malta, for example, is very strict and will not hesitate to decline an applicant. Countries such as Grenada also need to protect the integrity of their programmes and thus conduct strict due diligence on prospective applicants,” says Read Thaele.

Wealth migration

The migration of wealthy people away from a country is an important gauge of the health of that country’s economy. Wealth migration can also be a sign of bad things to come. 

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“If one looks at any major country collapse in history, it is normally preceded by a migration of wealthy people away from that country.”
— Andrew Amoils, Wealth Analyst at New World Wealth (NWW)

High-net worth-individuals (HNWI) are often the first to leave. According to New World Wealth, South Africa was among the countries that experienced significant (100+ HNWIs) wealth outflows during the past year. In the past ten years, HNWI total wealth in SA has declined by 18%. 

Among the countries that experienced the biggest wealth and HNWI percentage inflows are Australia, Israel, Greece, Portugal and UAE. Monaco, Malta, Mauritius, the Caribbean Islands and Bermuda also experienced significant (100+ HNWIs) wealth inflows during the past year, reports NWW.

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Residency, Citizenship & Real Estate

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