Pandemic Fuels Demand For Investment Migration, Alternative Citizenship
During the pandemic, high-net-worth individuals have sought citizenship in other countries.
5 min
“Never again”—that’s the feeling among high-net-worth individuals after 18 months in which global travel has been limited by the Covid-19 pandemic, said Jean Francois Harvey, global managing partner of Harvey Law Group, an international law firm based in Montreal that helps clients immigrate to new countries.
As international borders begin to reopen and the globe confronts a new, more contagious coronavirus variant, those who can are making plans to ensure they’ll never be so limited in their movement again. High-net-worth individuals are seeking real estate investments in historically safe real estate markets across Europe, the United Kingdom and the U.S., adding even more demand for prime properties in markets that are already seeing frenzied price growth.
“During COVID, the only way to get into another country was to be a resident or a citizen,” Mr. Harvey said. “Suddenly, people realize that to have only one residence or one passport is not the best.”
During the pandemic, the ultra-wealthy have pursued citizenship and residence-by-investment programs in record numbers. The industry, which has traditionally catered to high-net-worth individuals from emerging markets, has seen a newfound demand from residents of western countries like the U.S., Canada and Australia who are looking for second options in Europe and the Caribbean to live and work.
“If you’re a high-net-worth, ultra-high-net-worth individual, all you want is options in life and you want to diversify and hedge against risk as much as possible,” said Dominic Volek, group head of private clients at Henley & Partners, a London-based firm specializing in residence and citizenship by investment. “But then you have one citizenship and residence. It just makes no sense.”
Record Numbers of Inquiries
During 2020 and 2021, Henley Global saw record numbers of inquiries about citizenship- and residence-by-investment programs. Since the outbreak of the pandemic, the firm has seen an average increase in inquiries of 46% each month. Their client base has also changed—with an increase in demand of 47% from Canadians, 41% from Australians and 31% from Britons, and 208% from Americans.
“We’ve always had clients out of the U.S., but more recently, it’s by far our single biggest jurisdiction of new clients,” Mr. Volek said. “It’s bigger than any individual emerging market.”
Some Americans cite former President Donald Trump’s handling of the pandemic as a reason to find alternative residency, Mr. Volek said, since even the wealthiest couldn’t escape the U.S. when travel shut down. As more countries turned away people traveling from the U.S. due to high infection rates, the passport declined in value.
“It didn’t matter how many planes you had or that you had this great passport,” Mr. Volek said. “So all of a sudden, wealthy people realized they didn’t have as much flexibility as they thought they did.”
Interest also spiked leading into the November 2020 election, Mr. Volek added, as uncertainty led people to question how the U.S. government would handle major issues like the pandemic and taxation going forward.
“As soon as Mr. Biden was elected, there was a taxation-related wave of immigration,” Mr. Harvey said. “People suddenly expected that the government of the U.S. would be taxing more.”
At the same time, demand from U.K. citizens was peaking as Brexit finally became reality, and British citizens lost residency rights to the European Union.
Likewise, demand for foreign passports has been high in South Africa, as citizens there have sought refuge from the country’s political and economic instability, as well as visa-free travel to European countries.
Europe to Benefit From the Boom
Andy Brown began to look into alternative citizenship in 2019. The Johannesburg-based mining executive said he hoped to ensure a “safe, secure and predictable environment” leading up to his retirement.
“It’s all about securing my future now,” he said.
While he originally hoped to immigrate to the U.S., he changed plans in 2021 as it became evident that the pandemic had slowed the pace of the immigration process there.
He chose to look into one of the most popular paths to EU citizenship—Portugal’s Golden Residence Permit Program, which allows those who invest at least €500,000 (US$568,230) in real estate or €350,000 in venture capital the right to apply for residency. After five years of legal residency, investors can apply for citizenship.
The program has awarded 10,170 visas since its inception in 2012 and generated €5.5 billion in investment, with China, Brazil and South Africa leading the demand, and the U.K. and U.S. beginning to represent a larger share of applications.
For Mr. Brown, the most important part wasn’t the return on his investment—but to secure citizenship and get access to visa-free travel across Europe.
“I wanted to invest in a program that was regulated, in this case, by the Portuguese government, therefore presenting low risk to my investment,” he said. “At my age, I realized I have a limited window of opportunity to capitalize on the investment portfolio before I retire and relocate.”
While Portugal offers the quickest path to citizenship, it has developed a backlog in recent years, Mr. Harvey said. Other countries with similar programs have attracted more applicants lately, such as Spain, which has a 7-year path to citizenship, and Italy, which has a 10-year path. Another popular option, Malta, requires an investment of €600,000 and a three-year residence period, or in some cases, €750,000 and a 12-month residence period.
Other Destinations Beyond Europe
Most clients, though, are looking for multiple options.
“I don’t have a client from the U.S. getting just a single citizenship,” Mr. Volek said.
The Caribbean nations of Antigua and Barbuda, Dominica, Grenada, St. Kitts and St. Lucia—which all have been traditionally attractive to affluent individuals holding passports from countries with limited travel access—have become attractive even for Americans, due to their more isolated locations. There, citizenship is possible for $150,000 or less, and can take less than three months.
“It’s just optionality,” Mr. Volek said. “If I have the financial capacity to do it—why would I not just do it?”=
Meanwhile, Foreign Investment to the U.S. Returns
Since Nov. 8, Ilyse Dolgenas has been busier than usual.
That was the day that the U.S. borders reopened, and it also meant a wave of incoming calls to Ms. Dolgenas, special counsel at Withers, a firm that assists high-net-worth clients with luxury real estate, primarily in New York.
“Right away, I had some international clients call me just to talk about the market,” Ms. Dolgenas said. Despite concerns about city life returning back to normal, New York’s real estate market has been in a frenzy—fueled mostly by demand from domestic buyers, and now boosted by an increase in foreign investors.
“Foreigners don’t want to be late to the party,” she added. “They are in touch with their brokers and they are definitely shopping.”
Ms. Dolgenas said that New York would usually see several dozen contracts signed on residential apartments over $4 million each month. In the last few weeks, she’s seen between 40 and 60.
“There’s a cachet to owning a property in New York,” Ms. Dolgenas said.
Despite fears that Covid-19 would upend the housing market and change where people wanted to live, foreign investors have returned to the same urban markets that had been desirable pre-pandemic, like New York, Miami, London and Vancouver.
While American and British clients have primarily been interested in countryside vacation homes and villas, investors from China, Vietnam and other Asian markets are still tempted to buy in downtown areas where they can find an investment property or pied-a-terre.
“They’re sticking to what they know: a high-density district,” Mr. Harvey said.
Is Increased Investment Migration Here to Stay?
In the last few weeks, as news of the Omicron variant sparks worry that countries might implement new restrictions, Mr. Harvey has seen a rise in demand.
Moreover, those seeking citizenship through real estate investment are no longer just looking for visa-free travel—they’re also applying in order to secure better educational opportunities or government-supported healthcare.
“It went from a product of convenience to a life choice,” Mr. Harvey noted. “Motivations are a lot more personal… People are saying, ‘Let’s have an exit strategy.’”
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4 min
As Paris makes its final preparations for the Olympic games, its residents are busy with their own—packing their suitcases, confirming their reservations, and getting out of town.
Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country. Hotels and holiday rentals in some of France’s most popular vacation destinations—from the French Riviera in the south to the beaches of Normandy in the north—say they are expecting massive crowds this year in advance of the Olympics. The games will run from July 26-Aug. 1.
“It’s already a major holiday season for us, and beyond that, we have the Olympics,” says Stéphane Personeni, general manager of the Lily of the Valley hotel in Saint Tropez. “People began booking early this year.”
Personeni’s hotel typically has no issues filling its rooms each summer—by May of each year, the luxury hotel typically finds itself completely booked out for the months of July and August. But this year, the 53-room hotel began filling up for summer reservations in February.
“We told our regular guests that everything—hotels, apartments, villas—are going to be hard to find this summer,” Personeni says. His neighbours around Saint Tropez say they’re similarly booked up.
As of March, the online marketplace Gens de Confiance (“Trusted People”), saw a 50% increase in reservations from Parisians seeking vacation rentals outside the capital during the Olympics.
Already, August is a popular vacation time for the French. With a minimum of five weeks of vacation mandated by law, many decide to take the entire month off, renting out villas in beachside destinations for longer periods.
But beyond the typical August travel, the Olympics are having a real impact, says Bertille Marchal, a spokesperson for Gens de Confiance.
“We’ve seen nearly three times more reservations for the dates of the Olympics than the following two weeks,” Marchal says. “The increase is definitely linked to the Olympic Games.”
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According to the site, the most sought-out vacation destinations are Morbihan and Loire-Atlantique, a seaside region in the northwest; le Var, a coastal area within the southeast of France along the Côte d’Azur; and the island of Corsica in the Mediterranean.
Meanwhile, the Olympics haven’t necessarily been a boon to foreign tourism in the country. Many tourists who might have otherwise come to France are avoiding it this year in favour of other European capitals. In Paris, demand for stays at high-end hotels has collapsed, with bookings down 50% in July compared to last year, according to UMIH Prestige, which represents hotels charging at least €800 ($865) a night for rooms.
Earlier this year, high-end restaurants and concierges said the Olympics might even be an opportunity to score a hard-get-seat at the city’s fine dining.
In the Occitanie region in southwest France, the overall number of reservations this summer hasn’t changed much from last year, says Vincent Gare, president of the regional tourism committee there.
“But looking further at the numbers, we do see an increase in the clientele coming from the Paris region,” Gare told Le Figaro, noting that the increase in reservations has fallen directly on the dates of the Olympic games.
Michel Barré, a retiree living in Paris’s Le Marais neighbourhood, is one of those opting for the beach rather than the opening ceremony. In January, he booked a stay in Normandy for two weeks.
“Even though it’s a major European capital, Paris is still a small city—it’s a massive effort to host all of these events,” Barré says. “The Olympics are going to be a mess.”
More than anything, he just wants some calm after an event-filled summer in Paris, which just before the Olympics experienced the drama of a snap election called by Macron.
“It’s been a hectic summer here,” he says.
AFP via Getty Images
Parisians—Barré included—feel that the city, by over-catering to its tourists, is driving out many residents.
Parts of the Seine—usually one of the most popular summertime hangout spots —have been closed off for weeks as the city installs bleachers and Olympics signage. In certain neighbourhoods, residents will need to scan a QR code with police to access their own apartments. And from the Olympics to Sept. 8, Paris is nearly doubling the price of transit tickets from €2.15 to €4 per ride.
The city’s clear willingness to capitalise on its tourists has motivated some residents to do the same. In March, the number of active Airbnb listings in Paris reached an all-time high as hosts rushed to list their apartments. Listings grew 40% from the same time last year, according to the company.
With their regular clients taking off, Parisian restaurants and merchants are complaining that business is down.
“Are there any Parisians left in Paris?” Alaine Fontaine, president of the restaurant industry association, told the radio station Franceinfo on Sunday. “For the last three weeks, there haven’t been any here.”
Still, for all the talk of those leaving, there are plenty who have decided to stick around.
Jay Swanson, an American expat and YouTuber, can’t imagine leaving during the Olympics—he secured his tickets to see ping pong and volleyball last year. He’s also less concerned about the crowds and road closures than others, having just put together a series of videos explaining how to navigate Paris during the games.
“It’s been 100 years since the Games came to Paris; when else will we get a chance to host the world like this?” Swanson says. “So many Parisians are leaving and tourism is down, so not only will it be quiet but the only people left will be here for a party.”
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