The so-called “economic citizenships” has seen quite an upward trend particularly in the decade after the last global financial downturn for a number of reasons. There are a number of reasons for this. One is that wealthy property investors are increasingly seeking to protect and diversify their assets in jurisdictions other than their own, out of insecurity as their home markets have stabilised. Another is that passport with more visa-free travel options comes in handy, especially for wealthy investors from countries such as Russia and China and some nations in the Middle East.
Others looking for a second passport are basing their real estate purchasing decisions on which country offers the most attractive residency or citizenship package in return for investing in a property. These investors often want to set up a second home for business or retirement.
The increasing number of US citizens seeking to renounce their own citizenship because of the current political climate back home has been the latest push for citizenship-by-property-purchase scheme.
Looking back, citizenship by property investment was mainly promoted by cash-strapped Caribbean islands such as St Kitts and Nevis and Dominica, but as of late many more countries, namely in the European Union, have jumped on the bandwagon as a result of the debt crisis that squeezed national budgets there. Overall, the business is flourishing.
Powerful draw
“In the context of continued rising demand for overseas property, the fact that such schemes offering citizenships through the investment route is a powerful draw,” says Andrew Hay, global head of residential at Knight Frank. “Demand from wealthy investors is currently highest in China, Russia and the Middle East. The cost varies considerably, from a few hundred thousand dollars in some Caribbean islands to $1 million (Dh3.67 million) and more for citizenship in Cyprus, Turkey and some other European locations.”
As it stands, the popularity of Caribbean passports through property has declined since EU countries opened their doors. Cyprus now offers EU citizenship within half a year after buying a home without the need to stay there, whereas Portugal, Spain and Greece require the purchase of a property and taking residence, as per residence permit requirements, of five to ten years for naturalisation.
“The number of residence and citizenship-by-investment programmes is proliferating, and we are expecting a further slew to be announced in the near future,” says Christian Kälin, lawyer and citizenship specialist at Henley & Partners, a Jersey-based global residence advisory firm.
Affordable
“Recent European reforms mean that citizenship-by-investment programmes now offer more affordable access to the EU, and investment options have been restructured to include the choice to invest in real estate or development land,” says Kälin.
Which citizenship programme is the best for an individual depends on a number of factors. One is the number of countries that can be travelled visa-free and the greatly increased travel benefits coming with it. For others, particularly high-earners, the cost of an economic citizenship might be far less than the tax and compliance costs of maintaining their existing citizenship.
There are also nationalities that are restricted from doing business in certain countries and would benefit from a new passport to enhance their opportunities there. Based on all these, demand for property-based citizenship programmes among the rich and wealthy has been greatest from China, Russia and in the Middle East. There is also demand from countries such as Pakistan, India, South Africa and Vietnam.
