Good as Gold
With the UK exiting the EU, the search is on for locations offering the best visa benefits for investors.隨著英國脫歐，不少人開始尋找為投資者提供最佳簽證優惠的國家。
The irrational fear that China is taking over the world has become entrenched in the global public mind very quickly. But the so-called golden visa that so many Chinese investors are taking advantage of has already been with us for many years. Guarantees of residency and citizenship for investment into the local economy have been standard practice in the UK, the US and Canada for decades. Immigration law in the US made exemptions to the annual visa quota if an immigrant's skill set was deemed critical by the Department of Labor; in Canada, tax breaks and other perks were offered to anyone who would consider immigrating to locations such as labour-poor Regina and Winnipeg rather than Toronto and Vancouver. The list goes on.
The current iteration of “buying” a passport is via property. The past decade has seen a spike in golden visa programmes stemming from a combination of slow national growth in key countries and high unemployment (and so reduced tax revenue). Spain's golden visa programme has worked wonders for the country, and though it's still in recovery mode, it is indeed recovering thanks in part to public coffers puffed up from stamp duties. Several countries still offer automatic residency with the purchase of a property, among them the UAE, Bahamas, and St Kitts and Nevis, which has a world-best residency scheme that also provides visafree travel to over 100 countries, including Canada, the UK and the Schengen Zone. A St Kitts visa will cost a property of at least US$400,000.
But golden visa programmes can be thorny. While they may be legally faultless, they are ultimately sales tools. Knight Frank's director, head of research and consultancy for Greater China, David Ji, recalls a seminar for Chinese investors that touted visas in “countries I've never heard of,” he says only half jokingly. “Many products and programmes don't give you any confidence, and there's no well-known regulatory body or consumer council for this. You're solely in the hands of these advisors.” Passports may still demand five to eight years of residency, and there is a lot of fine print buyers are often unaware of. “Hidden clauses are what you need to worry about,” Ji continues. “I remember a conversation with an investor whose son was studying in Portugal. He seemed shocked when I told him the unemployment rate was 20% and as a foreigner he [couldn't] even stay after he graduated.”
Unknown factors can negatively influence these programmes: laws can change with new governments, and every jurisdiction has its unique taxes and fees. Ji argues golden visas can wind up being very costly for average investors scraping by in order to get kids into schools in prime locations. “That's where I see the risks. It's mostly financial,” finishes Ji. “In general I'm slightly sceptical of these programmes apart from a few well-known ones. And the general mood now is to restrict immigration. You're going to start seeing fewer and fewer investment plans. Politically, these are less likely to be expanded.” Nonetheless residency incentives remain, and two of the most popular are in Portugal and Cyprus.
Portugal's visa programme ranks at the top of the list for European investment visas for its relative flexibility and benefits. Launched in 2012—notably following the country's 2011 EU bailout—a €500,000 property purchase earns a residency permit renewable every two years on the condition the applicant spends two weeks in Portugal annually. Citizenship applications can be made after six years. That said, once residency is acquired this way applicants must demonstrate a commitment to Portugal and pass a language test. Full citizenship is needed to access the EU. Portugal's 8% unemployment rate is better than Greece's 19% and 10.9% in Italy, but much worse than the Netherlands' 3.9% and Germany's 3.4%. Once an investor or their family members get residency, what are they to do in that economic climate?
Property prices in Portugal are still 25% below their pre-2008 peaks, and demand for properties valued above €500,000 is rising, meaning there's potential for strong capital gains in the coming years. And of course there's that EU member status— though the appeal of that could dwindle with the departure of the UK. Savills' European Investment briefing in March 2018 noted Europe is experiencing its strongest growth since 2006, and while Brexit remains a risky unknown, Eddie Correia at Ideal Homes points to Portugal's long relationship (dating from the 12th century) with the UK. In a world that values increased connection Portugal is a great investment location for its gateway status—to Europe as well as to emerging economies in Africa, Asia and South America (here's hoping newly elected nationalist president Jair Bolsonaro in Brazil sees the bigger picture). Stellar culture, affordable, multigenerational homes and 300 days of sun annually may blunt the impact of the absence of the UK.
Correia agrees the bailout was a low point but post-bailout Portugal is more progressive and economically innovative. The economy is now underpinned by massive infrastructure investment (roads, airports, communications, education, tech) supporting growth and stability. “In real estate specifically, mortgage rates at 1.75% have provided an attractive incentive and helped increase sales. Valuations have also increased due to shortage of product, but so have the values of the individual property investments,” he finishes.
For investors seeking a bit more choice, Cyprus offers residency or citizenship track property incentives. For those in a hurry, the Cyprus Citizenship by Investment Program leads to eligibility for full EU citizenship in just six months for a €2 million real estate purchase—no language test required. Permanent residency for the whole family can be granted for just €300,000 invested into new property after two months and is valid for life. There is also a Cyprus International Trust, designed specifically as a way for parents to ensure their assets are passed on to their children.
Cyprus prides itself on its position at the nexus of three continents (Europe, Asia and Africa) and the inherent economic potential there, but it is still struggling with 7.5% unemployment and rocky relations with neighbours Turkey and Greece. But tourism is on the rise, and as Jerry Kwan, business development manager for the China market at Pafilia Property Developers, theorises, “Cyprus is rich in natural resources and presents a very promising economic forecast … Government data shows a strong real estate market with steady GDP growth at 2.6%.” Add to that a new casino that will underpin already growing tourism and the planned facilities to support it, and Cyprus expects to attract more joint ventures and ultimately more investment. “We expect Limassol and Pafos will be favoured in many ways with this wave of economic growth,” notes Kwan.
Of course, Brexit looms over Cyprus as well. Kwan doesn't see that as necessarily a negative for Cypriot investment. Cyprus is a smart destination for investors for many other reasons, “including but not limited to its tax advantages, blooming economy, and safe environments,” posits Kwan. “For those who are interested in the UK in particular, Cyprus is even more attractive, as it is built and managed in a way that follows the UK system.”