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Middle Easterners as well as Western and Asian expats who are based in the region and looking to invest in offshore property should consider a model of investment that would also gain them a second passport: a residence or citizenship-by- investment programme.
To boost their economies, some countries are offering citizenship-by-investment programmes that provide a direct route to residency or citizenship based on investments in the government or real estate. The countries running these programmes gain by having high-networth individuals (HNWIs) making hard currency investments, while successful applicants get valuable investment opportunities as well as residency or a second passport.
Apart from the financial opportunities, being citizens or residents in countries such as Malta or Portugal allows visa-free travel to the European Union (EU) and Schengen countries.
In St Kitts and Nevis in the Caribbean the citizenshipby- investment programme took off in 2006. This was after Christian H. Kalin, a Swiss lawyer and now Chairman of Henley & Partners, assisted the government to develop it further. To qualify for citizenship under the real estate option, its government requires applicants to make an investment in designated, officially approved real estate with a value of at least $400,000 (Dh1.47 million) plus the payment of government fees and other charges and taxes. Investors gain visa- free travel to 132 countries and no taxes on income or capital gains.
Early last year, Henley & Partners helped develop a programme for Malta, the smallest member of the EU. The Malta Individual Investor Programme (IIP) is widely considered the world’s most advanced and most exclusive citizenshipby- investment programme and has had over 700 applications since its launch. The programme also sees high demand from the Middle East and North Africa, with 30-40 per cent of total applicants from the Middle East.
Malta grants citizenship to applicants within 12-18 months, if they make a contribution of €650,000 (Dh2.67 million) to a development fund and buy property worth at least €350,000, among other requirements. New residents could benefit from an advantageous tax regime — they will be subject to a tax rate of only 15 per cent on earnings derived from outside Malta.
The excellent quality of life is another reason people are drawn to many of these countries. The Malta IIP was ranked as the best citizenship- by-investment program in the world by the Henley & Partners Global Citizenship Program Index 2015 and the country was recognised as the seventh-best place to retire by International Living Magazine in its Annual Global Retirement Index 2015.
Around 2,420 golden visas were issued through Portugal’s residency programme as of late June, bringing €1.46 billion of investment into the country. The Golden Residence Permit Programme enables foreign investors from outside the EU to acquire a residence permit through a qualifying investment, which includes acquisition of real estate. Recently, the country’s Golden Visa Immigration Legislation reduced the minimum qualifying investment cost to €350,000 for properties that were constructed more than 30 years ago or located in areas of urban regeneration, making it one of the most affordable immigration-by-investment programmes in the EU. With the minimum qualifying investment cost being lowered, the demand for Portuguese residency is expected to accelerate even further.
Antigua and Barbuda in the Caribbean allows full legal citizenship to be granted based on an investment in government-approved real estate, and the application procedure takes around three months. Passport holders of the country gain visafree travel to more than 130 countries, including Canada, South Africa, the UK and the Schengen zone.
An investment of at least $400,000 is required, and residents of Antigua and Barbuda benefit from no capital gains or estate taxes, and are not taxed on their worldwide income either.
The country’s highly developed tourism industry caters to the luxury market, which has created strong investment opportunities in the form of property development. Nonsuch Bay Resort is a development enjoying particular success, with investors seeing the prices of their properties now 40 per cent higher. An estimated 5 per cent return on the net cost associated with ownership of the suites can be expected when entering the resort’s rental programme.
The mobility of HNWIs is also starting to have a noticeable impact on some property markets. Financial Times recently reported that property prices in Portugal were up 5.9 per cent for the second quarter of last year and that the proportion of foreign investment in real estate surged from 45 per cent in 2012 to 70 per cent in 2013.
Source: Property Weekly