Covid-19: Citizens of developed nations seeking alternative residences outside

Ben Eguzozie

• US, Canada, UK citizens lead in quests
• US’ 100% enquiries dramatically astonishing
• Expert says big countries’ virus spreader risk eroded their passports’ shine, travel restrictions of their nationals

While the surge in interest for investment migration shown by citizens of emerging economies such as Nigeria and India is somewhat predictable, a fascinating turn of events, however, is the growing attention from nationals of leading developed nations such as the U.S, Canada and United Kingdom, seeking alternative residences outside their countries, says Juerg Steffen, chief executive officer of Henley & Partners, a global residency and citizenship planning firm.

“Most notable is America, with a dramatic 100% increase in enquiries from US citizens in the first six months of 2020 compared to the same period in 2019, along with significantly greater interest shown by Canadians and UK citizens,” said Steffen, whose firm, with 30 offices worldwide, provides expertise each year to hundreds of wealthy individuals and their advisors on residency and citizenship.

Henley & Partners said the massive volatility driven by Covid-19 has pushed the steady growth in investment migration into overdrive, with a nearly 50 per cent increase in enquiries overall as the pandemic coursed around the globe in the six months to June 2020 compared to the same period last year. “The tumultuous events of 2020, including the unplanned pause during the Great Lockdown, have resulted in people from all walks of life re-evaluating their circumstances and reconsidering how they wish to conduct their lives and — for those fortunate enough — choosing where they want to live by opting for investment migration,” he said in a report sent to Business A.M.

Investment migrating or migration through investment is a programme designed to attract foreign capital and business people by providing the right of residence and citizenship in return. These are also known as citizenship by investment, golden visa, or golden passport programmes far greater decision for the applicant and their family. The acquisition of permanent residency through investment often means the start of a new life in a new country.

The roots of golden visas have been traced back to the 1980s when tax haven in the Pacific and Caribbean began “cash-for-passport” programmes that facilitated visa-free travel and provided tax advantages. In 1984, St. Kitts and Nevis began its programme, which offered not only permanent residency but citizenship to foreign nationals.

The issuing of golden visas has expanded dramatically during the 21st century with around 25 per cent of all countries issuing such visas as of 2015. Statistics on the issuing of golden visas is scarce, but the International Monetary Fund (IMF) estimated in 2015 that the vast majority of golden visas are issued to Chinese nationals.

“Many are taking stock and ensuring they are better prepared for the next pandemic or major global disruption. The relentless volatility in terms of both wealth and lifestyle has resulted in a significant shift in how alternative residence and citizenship are perceived by high-net-worth investors around the world,” the firm said.

Startlingly, the US placed fourth globally in terms of the Henley & Partners total number of enquiries made in the first six months of 2020. India’s nationals outstripped all other nationalities by a long stretch. Henley & Partners received 96.5% more enquiries from Indian nationals than Nigerian nationals, who were placed second, followed by Pakistan.

“Perhaps the most remarkable Covid-related shift, however, was the huge spike in enquiries from Americans along with growing interest from Canadian and UK nationals,” the Henley & Partners report said.

Yossi Harpaz, an associate professor at Tel Aviv University in Israel, commenting on the recently released Henley passport Index Q3 Report, says the Covid-19 crisis has caused the world’s premium passports to lose some of their shine. “For decades, visa policies were designed to keep out illegal immigrants, asylum seekers, and terrorists. Citizens of wealthy and democratic countries — including Canada, the US, and Western

European nations — apparently posed no such risks and enjoyed extensive visa-free travel throughout the world. In the current crisis, a new category of risk has emerged: the spreader. Since the US and Western Europe were among the world’s hardest-hit areas, their citizens faced stringent mobility restrictions. This is, of course, a temporary situation, but in the long run, it is likely to erode the prestige of EU and Western passports,” predicts Harpaz.

For Dominic Volek, Henley & Partners’ group head of sales, “Once ‘nice-to-have’ assets of convenience and privilege that enhanced travel freedom and provided vacation or second homes, alternative residence and citizenship have rapidly become ‘must-have’ essential assets, not just to survive, but to thrive in the 21st century.”

He points out that 19 of the G20 nations offer some form of mechanism to encourage inward investment in exchange for residence rights. The 20th member is the EU, and 60 per cent of EU member states offer investment migration options.

Several countries that host investment migration programmes rank high on prominent indexes such as the 2020 Global Peace Index (GPI), which measures the level of peacefulness in 163 states, the World Bank’s 2020 Ease of Doing Business ranking of 190 economies, and Deep Knowledge Analytics’ updated Covid-19 Regional Safety Assessment rank of 250 countries, regions, and territories that was released late last month.

For those seeking the comfort of an alternative residence option in times of crisis, New Zealand comes out on top, impressively ranking 1st in both the GPI and Ease of Doing Business index and 2nd in the Covid-19 Regional Safety Assessment index. Other secure alternatives for high networth (HNW) families are Singapore, which ranks 7th in the GPI, 2nd in the Ease of Doing Business index, and 10th in the Covid-19 Regional Safety Assessment rank, and Australia, which ranks 13th, 14th, and 6th in the three indexes, respectively.

Also, in terms of alternative citizenship options in Europe, which has long been a bastion of stability and security, Austria is the top option, ranking 4th in the GPI, 27th in the Ease of Doing Business index, and 8th in the Covid-19 Regional Safety Assessment index, while Montenegro ranks 69th in the GPI, 50th in the Ease of Doing Business index, and 83rd in the Covid-19 Regional Safety Assessment index.

Although the Global Peace Index omits the Caribbean small-island nations, St. Lucia ranks 93rd in the Ease of Doing Business index and 127th in the Covid-19 Regional Safety Assessment rank, making it the Caribbean programme of choice for high-net-worth individuals (HNWI). Many affluent families are drawn to island nations due to their relatively small populations and the fact that they proved easier and quicker to lock down and secure in the current pandemic. Citizenship-by-investment in the Caribbean is a safe-harbour option favoured by HNWI as a result.

Steffen concludes that, as the world plunges into the worst recession since the Great Depression of the 1930s, proactive HNWI who have invested in alternative residence or citizenship for their families are best placed to weather the prolonged storm that lies ahead.

“Many business owners, investors, and their families have realized that they can operate remotely and that there is no longer a need to be based in or close to the large financial city centres. In the post-Covid era, investment migration programmes will be a reliable back-up plan, providing investors with unparalleled safety, security, stability, and opportunity, including access to major money markets. As a tried-and-tested hedge against volatility, securing alternative residence or citizenship is one of the safest, smartest, most sustainable investments you can make right now — an indispensable asset for many generations to come,” he said.