“Never again”: This is the feeling among people with high net worth after 18 months of global travel being limited by the Covid-19 pandemic, said Jean Francois Harvey, global managing partner of Harvey Law Group, a international law firm based in Montreal which helps clients immigrate to new countries.
As international borders begin to reopen and the world is confronted with a new, more contagious variant of the coronavirus, those who can are making plans to make sure they will never be so restricted in their movements again. High net worth individuals are looking for real estate investments in historically safe property markets in Europe, the UK and the US, adding even more demand for top-notch properties in markets that are already seeing frenzied price growth.
“During COVID, the only way to enter another country was to be a resident or citizen,” Harvey said. “Suddenly, people realize that having only one residence or one passport is not the best.”
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During the pandemic, the ultra-rich pursued citizenship and residency-by-investment programs in record numbers. The industry, which traditionally caters to high net worth individuals from emerging markets, has seen new demand from residents of Western countries such as the United States, Canada and Australia who are looking for second-rate options in Europe and the Caribbean to live and work.
“If you are a high net worth individual, extremely high net worth, all you want are options in life and you want to diversify and hedge as much risk as possible,” said Dominic Volek, parent company of clients. private individuals at Henley & Partners, a London-based firm specializing in residency and citizenship by investment. “But then you have a citizenship and a residence. It just doesn’t make sense. “
Record the number of requests
During 2020 and 2021, Henley Global recorded a record number of applications on citizenship and residency by investment programs. Since the outbreak of the pandemic, the company has seen an average increase in requests of 46% each month. Their customer base has also changed, with demand increasing 47% from Canadians, 41% from Australians and 31% from British and 208% from Americans.
“We’ve always had clients outside the US, but more recently it’s by far our largest new client jurisdiction,” said Volek. “It’s bigger than any single emerging market.”
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Some Americans cite former President Donald Trump’s handling of the pandemic as a reason to find alternative residency, Volek said, since even the richest could not flee the United States when travel is suspended. As more and more countries turned away people traveling from the United States due to high infection rates, the value of the passport has decreased.
“It didn’t matter how many planes I had or that I had this big passport,” said Mr. Volek. “So suddenly, wealthy people realized they didn’t have the same flexibility as they thought they did.”
Interest has also increased ahead of the November 2020 election, Volek added, as uncertainty has led people to wonder how the U.S. government will handle major issues like the pandemic and taxation going forward.
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“As soon as Mr. Biden was elected, there was a wave of immigration related to taxation,” said Mr. Harvey. “People suddenly expected the US government to tax more.”
At the same time, demand from UK citizens was peaking when Brexit finally became a reality and British citizens lost their residence rights in the European Union.
Likewise, demand for foreign passports has been high in South Africa, as citizens have sought refuge from the country’s political and economic instability, as well as visa waiver for European countries.
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Europe will benefit from the boom
Andy Brown began examining alternative citizenship in 2019. The Johannesburg mining executive said he hopes to ensure a “safe, secure and predictable environment” before his retirement.
“It’s about protecting my future now,” he said.
Although he initially hoped to immigrate to the United States, he changed plans in 2021 when it became apparent that the pandemic had slowed the pace of the immigration process there.
It has chosen to look into one of the most popular routes to obtaining EU citizenship: Portugal’s Golden Residence Permit Program, which allows those who invest at least € 500,000 (US $ 568,230) in real estate or € 350,000 in venture capital the right to apply for residency. After five years of legal residence, investors can apply for citizenship.
The program has granted 10,170 visas since its inception in 2012 and generated € 5.5 billion in investments, with China, Brazil and South Africa leading the way and the UK and US starting to account for a larger share of applications.
For Mr Brown, the most important part was not the return on his investment, but securing citizenship and gaining access to visa-free travel across Europe.
“I wanted to invest in a program that was regulated, in this case, by the Portuguese government, thus presenting a low risk to my investment,” he said. “At my age, I realized I had a limited window of opportunity to capitalize on my investment portfolio before I retire and move.”
Although Portugal offers the quickest route to citizenship, it has developed a backlog in recent years, Harvey said. Other countries with similar programs have recently attracted more candidates, such as Spain, which has a 7-year citizenship path, and Italy, which has a 10-year path. Another popular option, Malta, requires an investment of € 600,000 and a three-year residency period, or in some cases, € 750,000 and a residency period of 12 months.
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Other destinations beyond Europe
Most customers, however, look for more options.
“I don’t have a US client who gets a single citizenship,” said Mr. Volek.
The Caribbean nations of Antigua and Barbuda, Dominica, Grenada, St. Kitts, and St. Lucia, which have all traditionally been attractive to wealthy people holding passports from countries with limited access to travel, have also become attractive to Americans, because of their more secluded locations. There, citizenship is possible for $ 150,000 or less and can take less than three months.
“It’s just an option,” said Mr. Volek. “If I have the financial capacity to do it, why shouldn’t I just do it?”
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Meanwhile, foreign investment is returning to the United States
Since November 8, Ilyse Dolgenas has been busier than usual.
That was the day the U.S. borders reopened and it also meant a spate of incoming calls to Mrs. Dolgenas, a special adviser to Withers, a firm that serves high net worth clients with luxury real estate, primarily in New York. York.
“Right away, some international customers just called me to talk about the market,” Ms. Dolgenas said. Despite concerns about the return to normal city life, the New York real estate market has been in a frenzy, fueled primarily by demand from domestic buyers and now supported by an increase in foreign investors.
“Foreigners don’t want to be late to the party,” he added. “I am in contact with their brokers and they are definitely buying.”
Ms. Dolgenas said that several dozen residential apartment contracts are usually signed in New York for more than $ 4 million a month. In recent weeks he has seen between 40 and 60 years.
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“There is a prestige in owning a property in New York,” said Ms. Dolgenas.
Despite fears that Covid-19 would disrupt the housing market and change where people wanted to live, foreign investors have returned to the same urban markets that were desirable before the pandemic, such as New York, Miami, London and Vancouver. .
While American and British customers have been primarily interested in country holiday homes and villas, investors from China, Vietnam and other Asian markets are still tempted to shop in areas of downtown where they can find investment property or pied- a-terre.
“They are sticking to what they know: a high-density district,” said Mr. Harvey.
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Is the increase in investment migration going to stay?
In recent weeks, as news of the Omicron variant raises concerns that countries may implement new restrictions, Mr. Harvey has seen an increase in demand.
Additionally, those seeking citizenship through real estate investments are no longer just looking for visa-free travel, but are also applying to secure better educational opportunities or government-supported health care.
“It went from a convenience product to a lifestyle choice,” noted Mr. Harvey. “The motivations are much more personal … People say: ‘Let’s make an exit strategy'”.