Does the Investment Migration Industry need a Makeover?
June, 3, 2024
Investment
Entrepreneurship
Investment migration, once a niche market catering to affluent individuals seeking alternative residency or citizenship, has grown remarkably in recent years. As the demand for global mobility and access to new opportunities escalates, so does scrutiny surrounding the practices within the industry.
Amidst debates over transparency, due diligence standards, and ethical considerations, it becomes imperative to assess whether the existing landscape adequately serves the needs of all stakeholders.
Considering the political turmoil in several countries and the populist narratives that pressure HNWIs and their ability to obtain a second residence or citizenship legally, it is more critical than ever to assess whether investment migration continues to align with the market’s needs.
In this piece, I aim to explore the current state of the investment migration industry, its strengths and weaknesses, and the pressing need for potential alternatives and innovative programs to address emerging challenges.
The Existing Landscape for Investment Migration
There are primary investment migration inbound regions worldwide: the Caribbean and Europe.
The five Caribbean islands offer a similar product with a few variations and focus on selling passports for visa-free access to the United Kingdom and Europe.
Although investors acquire citizenship for more than just a robust travel document, one cannot argue against the most significant selling point — easy access to countries for HNWIs who previously would go through a painful visa application process, often multiple times a year, to the Schengen Zone and the United Kingdom. On the other hand, Europe offers various products within its investment migration solutions suite.
The most popular include a fast-track naturalisation process from Malta, limited physical presence with a pathway to citizenship in Portugal and Bulgaria, or long-term residence in Europe from Spain and Greece.
Some other options, like the Latvian and Italian programs, usually do not get the credit they deserve, as they tend to go under the radar. Direct citizenship by investment in Turkey, another example of an underrated product, is also an excellent option.
Consistent Pressure on the Caribbean
Both the Caribbean and EU programs face consistent political scrutiny. Various unelected “watchdogs” continuously hound Caribbean programs, putting pressure on who they allow to become citizens and how much they can charge.
We’ve already seen Dominica lose its visa-free access to the United Kingdom. Why Dominica and not the others? There are various thoughts on this. Dominica was the logical choice for the United Kingdom as it is the only CBI Caribbean island that isn’t a member of the Commonwealth Realm.
Not having the King of England as your head of state makes you a far more likely target to lose visa-free status than the other four Constitutional Monarchy nations.
The European Council has issued several warnings to the Caribbean islands, all regarding losing their visa-free status in the Schengen area if they do not improve “various” aspects of their programs.
Four of the five programs have agreed to increase the base investment cost to $200,000. Will this change in cost guarantee visa-waiver agreements in the future?
Amidst debates over transparency, due diligence standards, and ethical considerations, it becomes imperative to assess whether the existing landscape adequately serves the needs of all stakeholders.
Considering the political turmoil in several countries and the populist narratives that pressure HNWIs and their ability to obtain a second residence or citizenship legally, it is more critical than ever to assess whether investment migration continues to align with the market’s needs.
In this piece, I aim to explore the current state of the investment migration industry, its strengths and weaknesses, and the pressing need for potential alternatives and innovative programs to address emerging challenges.
The Existing Landscape for Investment Migration
There are primary investment migration inbound regions worldwide: the Caribbean and Europe.
The five Caribbean islands offer a similar product with a few variations and focus on selling passports for visa-free access to the United Kingdom and Europe.
Although investors acquire citizenship for more than just a robust travel document, one cannot argue against the most significant selling point — easy access to countries for HNWIs who previously would go through a painful visa application process, often multiple times a year, to the Schengen Zone and the United Kingdom. On the other hand, Europe offers various products within its investment migration solutions suite.
The most popular include a fast-track naturalisation process from Malta, limited physical presence with a pathway to citizenship in Portugal and Bulgaria, or long-term residence in Europe from Spain and Greece.
Some other options, like the Latvian and Italian programs, usually do not get the credit they deserve, as they tend to go under the radar. Direct citizenship by investment in Turkey, another example of an underrated product, is also an excellent option.
Consistent Pressure on the Caribbean
Both the Caribbean and EU programs face consistent political scrutiny. Various unelected “watchdogs” continuously hound Caribbean programs, putting pressure on who they allow to become citizens and how much they can charge.
We’ve already seen Dominica lose its visa-free access to the United Kingdom. Why Dominica and not the others? There are various thoughts on this. Dominica was the logical choice for the United Kingdom as it is the only CBI Caribbean island that isn’t a member of the Commonwealth Realm.
Not having the King of England as your head of state makes you a far more likely target to lose visa-free status than the other four Constitutional Monarchy nations.
The European Council has issued several warnings to the Caribbean islands, all regarding losing their visa-free status in the Schengen area if they do not improve “various” aspects of their programs.
Four of the five programs have agreed to increase the base investment cost to $200,000. Will this change in cost guarantee visa-waiver agreements in the future?
European Uncertainty for Golden Visa Programs
Then, in Europe, the industry has seen Malta taking on the European Commission after being taken to the European Court of Justice over their fast-track naturalisation program.
The court’s decision may open the door or shut it entirely on European Union countries offering similar programs in the future. There is vast hypocrisy in the case as it is well known that countries like Austria, Slovenia, Estonia, Slovakia, and potentially others all have citizenship by exception, which includes a route for economic (substantial investment) into the country.
These countries might only be processing five to twenty applications a year, but there is a route to citizenship for HNWIs without naturalising in a standard fashion.
Malta stands firm on being allowed to naturalise citizens under their sovereignty. The final decision will be sometime in 2024. If Malta can keep their program, I wouldn’t be surprised if Albania, Serbia, Moldova, and other EU candidate countries introduce or reintroduce CBI programs.
Portugal’s Golden Visa program experienced severe uncertainty in 2022 and 2023. Real estate is no longer an option for investors, although there will be routes and ways to own property under the Golden Visa.
Processing times for online applications in Portugal have been disastrously slow. Even after completing the online process, applicants have waited years to receive their residence ID cards, with many still awaiting final approval after applying in 2021.
Ireland outright stopped its investor residence program at the end of 2023. The massive demand between the government’s announcement and the program’s suspension led to a backlog of over €2 billion in investments from applicants. It would be nice to see where the government has been able to absorb this shortfall of foreign investment in 2024’s GDP numbers.
Greece increased the minimum for its real estate investment from €250,000 to €500,00 last year and will now raise it again to €800,000. Is this going to deter the HNWIs from investing in real estate? Probably not, but this continuous uncertainty can’t be good for business.
Spain is outright considering ruling out real estate as an option to obtain the Golden Visa. The government is blaming the roughly 2,500 investors (who represent 0.5% of total property transactions in the country per year) for rising housing prices. It is a mathematical impossibility and a blatant claim, but this argument may not save the Golden Visa now that the Spanish government has opened these discussions.
The Point is Positive Impact, Right?
The purpose of citizenship by investment or Golden Visa programs is to create a net positive impact on the country. Be it economic, social, or otherwise.
However, one significant issue is that so much negative news—be it legitimate or not—surrounds these programs. The news is prevalent, and because there can sometimes be some truth to claims, this can damage the image of Golden Visas.
The route to citizenship in Portugal through its Golden Visa involves an HNWI making one transaction to an investment fund, completing the A2 language test, visiting the country a couple of times, and then applying for citizenship after five years of maintaining their residency.
The argument that real estate investments employ people in construction, real estate management, and other associated services is valid and well-noted. But is there more to offer on a program level? Are there other possible routes to creating investment options that can satisfy multiple stakeholders?
The short answer is yes. However, the industry should not sit idly by and let governments develop new programs. We’ve seen how these internal government-developed programs can have design flaws that create uncertainty for the process and the client’s expectations.
This strategy has led to governments launching programs with unrealistic price points or requirements, which they change later. Turkey, Egypt, El Salvador, and Samoa are all examples of this.
Researching the laws already in the Immigration and Citizenship Acts can help us develop new programs for the investment migration industry. But the legislation is just part of the overarching plan.
Positive Impact is a critical component of any new program, where financial benefits flow to various stakeholders in the country. These benefits can come from active investment, donations, or endowments from successful investors, entrepreneurs, or corporate executives.
The industry knows what clients’ needs are. In Europe, clients want a flexible and renewable residence permit and EU ID card to enter the country and have visa-free access to the rest of the Schengen Area. If that route can lead to citizenship, even better.
In return, clients would be willing to invest or donate and transfer their knowledge and experience into programs or projects in the country.
Funding projects and programs at the local government level is often incredibly hard. These alternative residence solutions can play a significant role in easing the financial burden of funding and finding experienced resources for the projects, but they need the right framework to function correctly.
Then, in Europe, the industry has seen Malta taking on the European Commission after being taken to the European Court of Justice over their fast-track naturalisation program.
The court’s decision may open the door or shut it entirely on European Union countries offering similar programs in the future. There is vast hypocrisy in the case as it is well known that countries like Austria, Slovenia, Estonia, Slovakia, and potentially others all have citizenship by exception, which includes a route for economic (substantial investment) into the country.
These countries might only be processing five to twenty applications a year, but there is a route to citizenship for HNWIs without naturalising in a standard fashion.
Malta stands firm on being allowed to naturalise citizens under their sovereignty. The final decision will be sometime in 2024. If Malta can keep their program, I wouldn’t be surprised if Albania, Serbia, Moldova, and other EU candidate countries introduce or reintroduce CBI programs.
Portugal’s Golden Visa program experienced severe uncertainty in 2022 and 2023. Real estate is no longer an option for investors, although there will be routes and ways to own property under the Golden Visa.
Processing times for online applications in Portugal have been disastrously slow. Even after completing the online process, applicants have waited years to receive their residence ID cards, with many still awaiting final approval after applying in 2021.
Ireland outright stopped its investor residence program at the end of 2023. The massive demand between the government’s announcement and the program’s suspension led to a backlog of over €2 billion in investments from applicants. It would be nice to see where the government has been able to absorb this shortfall of foreign investment in 2024’s GDP numbers.
Greece increased the minimum for its real estate investment from €250,000 to €500,00 last year and will now raise it again to €800,000. Is this going to deter the HNWIs from investing in real estate? Probably not, but this continuous uncertainty can’t be good for business.
Spain is outright considering ruling out real estate as an option to obtain the Golden Visa. The government is blaming the roughly 2,500 investors (who represent 0.5% of total property transactions in the country per year) for rising housing prices. It is a mathematical impossibility and a blatant claim, but this argument may not save the Golden Visa now that the Spanish government has opened these discussions.
The Point is Positive Impact, Right?
The purpose of citizenship by investment or Golden Visa programs is to create a net positive impact on the country. Be it economic, social, or otherwise.
However, one significant issue is that so much negative news—be it legitimate or not—surrounds these programs. The news is prevalent, and because there can sometimes be some truth to claims, this can damage the image of Golden Visas.
The route to citizenship in Portugal through its Golden Visa involves an HNWI making one transaction to an investment fund, completing the A2 language test, visiting the country a couple of times, and then applying for citizenship after five years of maintaining their residency.
The argument that real estate investments employ people in construction, real estate management, and other associated services is valid and well-noted. But is there more to offer on a program level? Are there other possible routes to creating investment options that can satisfy multiple stakeholders?
The short answer is yes. However, the industry should not sit idly by and let governments develop new programs. We’ve seen how these internal government-developed programs can have design flaws that create uncertainty for the process and the client’s expectations.
This strategy has led to governments launching programs with unrealistic price points or requirements, which they change later. Turkey, Egypt, El Salvador, and Samoa are all examples of this.
Researching the laws already in the Immigration and Citizenship Acts can help us develop new programs for the investment migration industry. But the legislation is just part of the overarching plan.
Positive Impact is a critical component of any new program, where financial benefits flow to various stakeholders in the country. These benefits can come from active investment, donations, or endowments from successful investors, entrepreneurs, or corporate executives.
The industry knows what clients’ needs are. In Europe, clients want a flexible and renewable residence permit and EU ID card to enter the country and have visa-free access to the rest of the Schengen Area. If that route can lead to citizenship, even better.
In return, clients would be willing to invest or donate and transfer their knowledge and experience into programs or projects in the country.
Funding projects and programs at the local government level is often incredibly hard. These alternative residence solutions can play a significant role in easing the financial burden of funding and finding experienced resources for the projects, but they need the right framework to function correctly.
Better Social Impact, More Integration, and Better Use of Foreign Investment
Alternative investment migration solutions can put the globally oriented individual in a far better position to apply for and obtain citizenship. Requirements for citizenship by naturalisation will vary from country to country, and identifying those criteria is key to understanding how to approach any specific program.
Recently, I posted a LinkedIn post about time vs. integration, which is more important to consider for naturalisation. I was trying to drive the concept of integration, make a tangible difference and impact, and be actively involved in “for good” projects in a country.
These components can be more critical than physical residence. Completing language courses at a higher level than the elementary requirements, for example, can speed up the naturalisation process, as is the case for Cyprus and Germany.
These interactions are more valuable than achieving the minimum residency requirement immediately before applying for citizenship.
Additionally, residents who are successful investors, entrepreneurs, and executives from abroad can deliver high-impact engagement for local programs, projects, and individuals.
Now, should this lead to immediate citizenship by exception, which exists in several other countries? No, unless the acts are truly exceptional.
However, people should aim to be actively involved in projects and programs in the country; there is a legitimate portfolio of evidence of social integration by working with R&D projects and startups and mentoring young talent in the country.
Donations and investments directly into projects rather than going into a centralised fund allow the individual to see tangible results in their integration and provide a positive impact to their community.
Talent-based programs such as the Global Talent Portugal HQA and Global Talent French Passport residency open the door to maximise benefits for multiple stakeholders.
Awarding residency to this type of applicant profile allows for transferring knowledge, skills, and experience to local talent working in R&D and entrepreneurship activities.
Citizenship after five to six years of holding residence and completing other requirements seems like a model that solves many concerns about investment migration programs.
The investment migration industry is anything but static; changes are constantly occurring, and new programs will come and go. With Bulgaria and Romania joining the Schengen Zone, there might be an opportunity for new programs, as well as several other countries that already have Golden Visa programs continuing to change. The investment migration industry is anything but static; changes are constantly occurring, and new programs will come and go. At least, there are plenty of options to look at, and this allows participants to have multiple passports and residence permits these days. A growing trend in its own right.
Alternative investment migration solutions can put the globally oriented individual in a far better position to apply for and obtain citizenship. Requirements for citizenship by naturalisation will vary from country to country, and identifying those criteria is key to understanding how to approach any specific program.
Recently, I posted a LinkedIn post about time vs. integration, which is more important to consider for naturalisation. I was trying to drive the concept of integration, make a tangible difference and impact, and be actively involved in “for good” projects in a country.
These components can be more critical than physical residence. Completing language courses at a higher level than the elementary requirements, for example, can speed up the naturalisation process, as is the case for Cyprus and Germany.
These interactions are more valuable than achieving the minimum residency requirement immediately before applying for citizenship.
Additionally, residents who are successful investors, entrepreneurs, and executives from abroad can deliver high-impact engagement for local programs, projects, and individuals.
Now, should this lead to immediate citizenship by exception, which exists in several other countries? No, unless the acts are truly exceptional.
However, people should aim to be actively involved in projects and programs in the country; there is a legitimate portfolio of evidence of social integration by working with R&D projects and startups and mentoring young talent in the country.
Donations and investments directly into projects rather than going into a centralised fund allow the individual to see tangible results in their integration and provide a positive impact to their community.
Talent-based programs such as the Global Talent Portugal HQA and Global Talent French Passport residency open the door to maximise benefits for multiple stakeholders.
Awarding residency to this type of applicant profile allows for transferring knowledge, skills, and experience to local talent working in R&D and entrepreneurship activities.
Citizenship after five to six years of holding residence and completing other requirements seems like a model that solves many concerns about investment migration programs.
The investment migration industry is anything but static; changes are constantly occurring, and new programs will come and go. With Bulgaria and Romania joining the Schengen Zone, there might be an opportunity for new programs, as well as several other countries that already have Golden Visa programs continuing to change. The investment migration industry is anything but static; changes are constantly occurring, and new programs will come and go. At least, there are plenty of options to look at, and this allows participants to have multiple passports and residence permits these days. A growing trend in its own right.