Have millions, will move to Malta
• More wealthy South Africans are throwing (some of) their lot in abroad
Offshore boltholes offering work abroad without the fuss of permits as well as education for children at excellent schools can now be bought for not much more than the price of an average house in an upper middle-class suburb.
Political uncertainty, a limping economy, the possibility of further ratings downgrades and other concerns about SA’s future have brought golden visa programmes into vogue.
They allow South Africans to buy their way to European, American and other citizenship.
A second citizenship or residence can be obtained in countries such as the US, Grenada, Cyprus, Malta and Portugal.
Last November, Malta was ranked as the world’s top citizenship-by-investment programme and Portugal as the top residence-by-investment programme, according to Henley & Partners SA, which offers investment migration services.
Its managing partner, Nigel Barnes, says there has been “a massive shift in global mobility and migration”.
“But while more and more South Africans are interested in investment migration programmes, the majority of applicants for citizenship programmes have no intention to emigrate but rather to have a plan B available and hedge against future uncertainty.”
Emigration lawyer Leon Versfeld of Versfeld and Hugo says South African interest in US migration programmes has reached a record high. He grew up and completed his initial studies in Pretoria and has been in the US for 17 years, operating out of Kansas City.
“Many people want help with finding opportunities for their children. By going through these programmes, children can study more cheaply and access work, for example,” he says.
Some applicants want to make their holidays cheaper and Versfeld has also seen interest from farmers looking to work outside SA.
In the past two years, Versfeld’s firm has represented 100 South Africans. “I’ve visited Cape Town more in the past two years than ever before,” he says.
South Africans also move abroad because their employers demand relocation.
Jason Graaff, 42, has been through the US EB-5 process and will relocate to California. He is employed by a listed company that has shareholders on the Nasdaq. Married with two teenage sons, Graaff says he intends to visit SA regularly.
“The [application] process is intensive and onerous but it’s definitely been a success for me. The Americans are very stringent in terms of checks they put in place,” he says.
“They require five years of tax returns, five years of bank statements, medical information and other documents pertaining to family history, any criminal activity that you or somebody in your immediate family may have experienced, and so forth.”
Graaff is investing $500,000 (R7m) in a mixed-use development in the US. The EB-5 immigrant investor programme enables foreign investors and their immediate families to obtain US green cards or permanent residence by investing $500,000 in businesses or real estate projects that create at least 10 full-time jobs for Americans.
The programme was introduced in the 1990s to develop or re-energise regional economies. Until about 2013, there were very few South African applicants, but interest has grown.
Chris Immelman, head of the international division of Pam Golding Properties (PGP), agrees that affluent South Africans are not necessarily joining these programmes to emigrate, but interest has increased, given weak economic conditions and political instability in SA. They regard them as a plan B for their money and their family.
“We have not seen a spike, but we have had a strong interest in our programmes, especially Portugal. These people are not necessarily emigrating. They are merely making the world’s markets work for them, repositioning their assets and their homes for a while,” he says.
Immelman says that many wealthy families also want their children to have access to foreign universities.
Liza Manoussis has run Global Education SA since 2006. She counsels students on how to study abroad and works with advisers such as Henley & Partners to get the children of emigration programme candidates into offshore academies.
PGP offers various programmes, with the most popular being those that offer European residency or citizenship.
The company’s most popular programme is the Portugal Golden Visa Scheme.
It is run in partnership with Sable International and participants must meet at least one of three criteria.
Applicants must make a capital investment of at least €1m in a Portuguese company, establish a Portuguese company that employs more than 10 people, or acquire real estate in the country with a minimum value of €500,000. Successful applicants get Schengen visas and may apply for permanent residence after they have renewed a residence permit for five years.
PGP will soon launch a citizenship programme for Spain. Non-EU investors can take advantage of that government’s incentive that grants permanent residency permits to people spending €500,000 or more on property or land.
Malta is also popular among South Africans seeking a second citizenship. English is an official language alongside Maltese and the island is a popular holiday destination for the British.
For a relatively affordable five-year investment of between €520,000 and €570,000, successful applicants to the Malta Residence and Visa Programme get long-term unrestricted access to the Schengen area and the right to live in the 40th most competitive economy in the world — within three months of applying, says Immelman.
Maltese residence does not require a physical presence in the country.
“Foreign property ownership has always held wide appeal for the affluent,” says PGP CE Andrew Golding. “Many of these top-end buyers are actually purchasing seaside residential properties or other lifestyle properties abroad.
“These not only provide a holiday destination or a second or third home, but they are also an excellent means of diversifying property portfolios and securing a sound long-term investment and if that investment comes with the advantage of residence or citizenship status, that’s even better.”
Jacques Scherman, MD for Africa at Arton Capital, says an easier way to gain residence in the US could be through Grenada in the Caribbean.
“The EB-5 programme for America is onerous and burdensome. You can go the Grenadian route, then apply for a US E2 visa, which is easier than EB-5,” he says.
Nadia Read Thaele of LIO Global, a company that specialises in planning residence by investment and citizenship by investment, says Grenada has “so many plus factors that it now comfortably tops the list of destinations for South Africans who are serious about obtaining a second passport”.
The Grenada Citizenship-byInvestment Programme is the only Caribbean programme that offers visa-free access to China, she says.
Grenada is one of only three countries in the world with 30-day visa-free access to China. “Many business clients find it helpful not to have to scurry for visas every time they need to travel to the East.
“A Grenada passport also provides visa-free access to the Schengen zone, Singapore, Hong Kong and Brazil — other key trade destinations,” Thaele says.
The investment required starts at $350,000 into a government-approved real estate project and the property must be held for a minimum of three years. Alternatively, a nonrefundable contribution of $200,000 can be made to the country’s National Transformation Fund. Additional government and application fees are payable.
Grenada offers access to the US via an E-2 Investor Visa treaty, which affords applicants who meet the investment provisions the right to live, work and study in the US.
The E-2 visa is issued for two- or five-year periods. It requires investment capital and reserves of at least $100,000 to $200,000 into a business that can demonstrably employ at least four people. The visa is renewable every five years.
There is no requirement to relocate or live in Grenada and there are no language restrictions. The programme leads to direct citizenship within three to four months. The citizenship extends to spouses and dependant children under 25. The citizenship is generational and can be passed on and gives holders the right to live, work and vote in the country, says Thaele.
Grenada is a tax-friendly jurisdiction with no personal income tax, gift and inheritance tax or capital gains tax.