It is clear that we are in the middle of a surge in popularity for investor immigration programs. However, prospective immigrant investors face uncertainty due to the changing requirements related to the programs available to them.
The U.S., Canada and Hong Kong have long had the most popular immigrant investor programs, but all three face uncertain futures. The U.S. program reached its limit in 2014 and now has a large backlog of applications; without changing the visa limit, it cannot continue to grow. Canada canceled its federal program in 2014. While the Quebec program continues to operate, it will not have the capacity to meet existing demand and backlog applications. The investment thresholds and other requirements of Canada’s new Immigrant Investor Venture Capital Pilot Program rules that route out for the majority of prospective Canadian immigrant investors. Hong Kong suspended its Capital Investment Entrant Scheme in early 2015, and does not look set to reopen it.
The status of the U.S., Canada and Hong Kong programs has left many prospective immigrant investors in limbo. The situation particularly effects Chinese nationals, who are the major applicants to all three programs. Experts predict that Chinese nationals could face two or three years of waiting and uncertainty before their U.S. EB-5 visas are approved. In Canada, there were around 65,000 unprocessed applications when the federal program was closed; around 70% were Chinese. In Hong Kong, there was an average of more than 4,000 visa approvals for principal investor applicants in each of the last four years of the program.
Thus many prospective immigrant investors will be forced to look to other destinations. The U.K. program still has capacity to grow, but the recent doubling of the investment threshold may restrict it to the wealthier end of applicants. Likewise, Australia’s Significant Investor Visa and New Zealand’s Investor Plus category have capacity, but require significantly more investment than the U.S., Canada and Hong Kong programs. For high-net-worth individuals looking for alternative residence, emerging programs in Bulgaria, Greece, Hungary, Latvia, Portugal and Spain are more affordable and will grow in appeal.
Those with requisite funds may also look towards citizenship programs in Malta and Cyprus, which offer greater visa-free travel options and coveted residence in Europe’s Schengen zone. For Chinese nationals, however, single citizenship policy would force a difficult decision, as giving up Chinese citizenship may be an impediment to their business interests in China.
The citizenship programs in Malta and Cyprus may also attract investors who would previously have chosen an option in the Caribbean. However, the lower investment costs in the Caribbean should ensure they continue to enjoy strong uptake. In particular, programs in Grenada and Dominica will grow in appeal, with both nations having recently agreed visa-free travel arrangements with the European Union.
Impact of changes in government and policy
Investor immigration programs remain subject to the risk of being abolished or restricted following changes in government or policy. In recent years, Malta’s introduction of the Individual Investor Programme for citizenship has generated much political opposition. The country’s opposing Nationalist Party has gone as far as to vow to revoke the citizenships of beneficiaries of the scheme should it come to power. While there are doubts over whether this may be legally possible, such threats are likely to spook prospective applicants to the program.
Demand from investors
The countries offering investor immigration programs have varied greatly over the last five years, with many new programs being introduced, but several major ones being closed, suspended or restricted in capacity. Although this leads to some uncertainty around the availability of programs in the future, there is a growing awareness among policymakers of the benefits of attracting high-net-worth foreign investors as residents or citizens. Therefore, it is likely that several new programs will emerge in the coming years, and successful existing programs will continue to be supported. Their success is largely dependent on demand from wealthy global citizens.
Over the last five years, growth in demand has been led by investors from China. According to research by Bain & Company and China Merchants Bank, there are more than one million high-net-worth individuals (investible assets of more than $1.6 million) in China. According to a report by the same companies in 2013, around 60% of these individuals were considering or had already completed an investor immigration program. However, only around 10% had already migrated, with around 50% saying they may migrate in the future or had considered but not decided yet. It is clear, therefore, that there is still huge potential demand from China. As private wealth continues to grow, demand for investor immigration programs from wealthy Chinese individuals is likely to increase over the next decade.
Aside from China, much demand for investor immigration has been led by the Middle East, Russia and former Soviet states. While this demand is partly due to political instability or uncertainty, many investors are largely motivated by visa-free travel and international mobility. Thus, demand from these regions should remain strong regardless of changes in political situations.
Other countries and regions with potential for growth include Africa, South Asia, Southeast Asia and Latin America. While Africa has a lower percentage of high-net-worth individuals than the rest of the world, private wealth is growing and investors are likely to look to diversify their assets abroad and expand their options for global mobility. Citizens of Nigeria and South Africa in particular are showing an increased appetite for investor immigration programs. The U.S. EB-5 program has seen more applications from Nigeria in recent years, while South Africa is the country with the fourth most applicants for programs in Portugal and Australia.
In South Asia, there is still untapped potential for demand for investor immigration programs. India, despite its size and considerate high-net-worth population, has never been a major contributor to uptake for residence and citizenship by investment. This is all the more surprising given the number of wealthy Indians domiciled abroad and the fact that Indian passport holders face restricted international mobility, requiring visas for North America and Europe among others. One possible explanation is that Indian citizens typically prefer and are eligible for other migration routes. In 2014, 23% of all immigration visas issued by the U.S. to citizens of China were through the EB-5 route; for citizens of India it was less than 1%. In the U.K. in 2014, Indians made up 1% of all investor visa applicants, but 8.5% of entrepreneur visa applicants. Despite the current lack in demand, there is huge potential for India to become a major source of immigrant investors. As understanding of the benefits of residence and citizenship by investment programs rises, it should be expected that India will emerge as a leader of demand in the coming years.
In Southeast Asia, applications from Vietnam are on an upward trend, with an increase in demand for programs in the U.S. and Australia. The rest of the region, however, has very low uptake. With economic growth expected to continue and the high-net-worth population predicted to expand, there is definite potential for demand to increase. As businesses in the region expand to European and North American markets, business leaders are likely to have increased need for residence options and mobility in the region. Meanwhile, political uncertainty in Thailand and Myanmar could also fuel demand for investor immigration programs.
Finally, there are signs of growth in demand from Latin America. Immigration agents in the U.S. have reported significant increases in inquiries from Brazil, spurred by an unsettled political climate and a stagnating domestic economy. Applications from Brazil to Portugal’s Golden Visa program are also increasing, and it is now behind only China in terms of applicant numbers. Elsewhere in the region, economic crisis in Venezuela has also seen an increase in wealthy individuals seeking to obtain residence in the U.S., while there has also been growth in applicants from Mexico.
Perceptions of investor immigration
The concept of investor immigration does not sit well with many. Negative media coverage continues to damage the reputation of the industry and places the future of several programs in jeopardy. The Global Investor Immigration Council recognizes that enhancing the reputation of the industry is crucial to its long-term viability and opportunities for growth. However, it also recognizes that reputation cannot be improved solely through advocacy and positive PR.
Thus, the GIIC aims to serve as a solid ground for the development and maintenance of industry best practices. Through enforcement of its Code of Conduct, the GIIC will ensure that advisors, agents and lawyers in the investor immigration business are held to a higher standard and operate in a manner conducive to long-term stability for the industry. Through its research, the GIIC will highlight the positive impact of investor immigration and serve as a voice to promote the industry. Finally, the GIIC will advocate transparency and ethical conduct in the industry, and, through its research and the knowledge and experience of its members, promote policies that offer maximum benefit to governments offering investor immigration programs.