In response to unprecedented demand among global investors for alternative residence and citizenship options in the wake of ongoing turbulence and uncertainty caused by the Covid-19 pandemic, Henley & Partners in partnership with Deep Knowledge Analytics today launched the Best Investment Migration Real Estate Index — a unique new analytical tool to assess investment migration programs offering real estate investment as a pathway to residence rights or citizenship acquisition.
The leading international residence and citizenship advisory firm saw an 80% increase in enquiries over the past 12 months off the back of an already record-breaking year in 2020 as wealthy investors scrambled to diversify their domiciles at the same time as their investment portfolios in a bid to secure greater global access and optionality as a hedge against unrelenting market and political volatility.
The Best Investment Migration Real Estate Index is a first-of-its-kind metric for those in the market for a secondary residence or citizenship. It considers over 30 parameters and over 300 data points to score and compare program options worldwide according to key considerations such as the reputation of and quality of life in the host country, GDP, the minimum real estate investment amount, potential rental income, associated property costs, application processing efficiency, the real estate holding period, residence requirements, any restrictions, and saleability, as well as crypto-friendliness, which is gaining in importance among global investors.
A sizeable, profit-yielding asset with a volatility hedge
Henley & Partners Group Head of Private Clients, Dominic Volek, points out that the endless rounds of quarantine and lockdowns, remote work and virtual schooling, and borders snapping shut and re-opening at will, have convinced even those investors from wealthy nations with premium passports of the benefits of alternative residence and/or citizenship. “International real estate has always been a reliable asset class for global investors due to its long-term staying power. Real estate–linked investment migration programs have the additional advantages of enhancing your global mobility through multiple passports and expanding your personal access rights as a citizen or resident of additional jurisdictions, creating optionality in terms of where you and your family can live, work, study, retire, and invest. The potential gains over the lifetime of the investment include the core value of the asset, rental yields, and global access as an ultimate hedge against both regional and global volatility.”
Dmitry Kaminskiy, Co-founder and Managing Partner of Deep Knowledge Group, says that the pandemic has encouraged investors to rearrange their portfolios to prioritize access to places where they and their families can enjoy greater healthcare and lifestyle benefits. “Longevity is increasingly recognized as a key driver for both citizen and corporate relocation. Individuals, companies and investors alike will seek out territories that best support the optimization of their health and wealth, as well as regions with established longevity industry ecosystems that facilitate the growth of companies and their products, services, and supply-chains.”
A unique hybrid investment
The collaboration between Deep Knowledge Analytics, a subsidiary of Deep Knowledge Group that produces advanced analytics to deliver insightful market intelligence and pragmatic forecasting, and Henley & Partners draws on multiple datasets including World Bank Data to showcase the top 16 countries worldwide vying to attract foreign investment by offering two desirable assets — access to multiple jurisdictions and international real estate — in just one transaction.
Commenting on the Best Investment Migration Real Estate Index, CEO of the international Engel & Völkers Group, Sven Odia, says the premium segment, namely properties over EUR 5 million, has seen a sharp increase in demand during the pandemic, with real estate playing a more significant role in investment than ever before. “We recorded a 97% rise in residential property transactions in the EUR 5 million to EUR 10 million segment from January to December 2021 compared to the previous year, and an increase of 90% in the top segment of properties valued over EUR 10 million.”
Director of Savills World Research, Paul Tostevin, agrees that 2022 will be another year of strong performance for prime residential property in the world’s leading cities. “A general focus on wellbeing will mean that cities that offer the most livable urban environments and the lowest pollution levels are likely to outperform in the longer term, while meeting the broader challenges associated with climate change. Those that don’t will need to address these issues to remain competitive on a global stage.”
Nick Whitten, Head of UK Residential and Living Research at JLL, points out that the pandemic has created an opportunity to bring the best of both worlds — town and country — together. “Covid-19 triggered a boost in demand for the things we typically associate with rural living, causing strong house price growth outside towns and cities across most of the developed world. Demand has now bounced back for cities, particularly in areas that offer a village feel. Certain cities in Spain and Portugal — both of which rank in the top five in the Best Investment Migration Real Estate Index — can be considered as models for this concept.”
Future-focused UAE tops the rankings
With scores from all categories tallied, the Emirate of Dubai claims 1st place on the new index, scoring highly for rental income potential, and the price of property per square meter is lower than other major international centers. Property acquisition by foreign nationals is galvanized by the country’s reputation for being a safe and secure environment in which to reside, attractive employment conditions, strong economy, and progressive outlook in terms of industries such as renewable energy. Various government initiatives have recently been introduced to improve livability and support residence by investment programs, including enhanced purchasing benefits.
Europe dominates the top five spots
Spain is placed 2nd in the overall rankings, bolstered by its economic strength, with the highest score in the GDP parameter. One of Europe’s most sought-after property investment destinations, Spain offers a range of locations, from urban to island. Foreign nationals can invest in residential, commercial, or land acquisition, with no limits.
The 3rd spot on the index is occupied by Montenegro, which has emerged as a key second-home and property-investor market in the Mediterranean — with investors able to choose from glamorous coastal resorts to new establishments servicing increasingly popular mountain and ski areas in the north. With no required holding period or residence requirement for investors, Montenegro’s highest scores are in these two parameters, while it also has excellent scores for investment amount and rental income. Applicants to the Montenegro Citizenship by Investment Program are exempt from the country’s restrictions on dual citizenship, making this an attractive option to investors who see Montenegro as an ideal, well-priced gateway to Europe and the associated networking and business opportunities throughout the region
Transcontinental Turkey comes in at 4th place overall, with high scores for its relatively low investment amount and residence requirements. Benefits of investing in the Turkey Citizenship by Investment Program include government incentives such as lower purchasing taxes and exemption from VAT. Real estate prices have remained competitive, adding to the attraction of property acquisition.
Firm favorites for lifestyle – Portugal, Thailand, and Greece
Sharing 5th spot with Thailand, the Portugal Golden Residence Permit Program continues to outstrip all others in terms of the number of enquiries received for good reason. The country’s luxury real estate market showed resilience during the pandemic, and this is expected to continue for those investors prioritizing quality of life. With high scores for its low investment amount, saleability, and crypto-friendliness, investing in real estate in this EU member state is a wise move that many global investors, particularly those from the USA, have already made.
In 6th position overall is Greece, where the Greece Golden Visa Program offers investors a range of benefits including the opportunity to rent out investment property in one of Europe’s most popular tourist regions. Interest in Greece’s Golden Visa Program has seen a healthy uptick over the past three years, not least due its affordable real estate investment option and the fact that no physical residence is required.
Caribbean and Cypriot island paradises
Grenada in 7th spot offers a range of government-approved real estate development options including resort homes, estates with ocean frontage, and luxury studios as well as an educational real estate project. The island nation hosts a large student population presenting opportunities for secure returns on rental property. The picturesque ‘Spice Island’ holds great appeal for families, individuals, and those looking to invest for the purpose of enhanced travel freedom, as Grenadian passport holders enjoy visa-free access to 144 destinations, including China, Hong Kong, Singapore, the UK, and Europe’s Schengen Area.
Cyprus — a growing international hub with excellent infrastructure — is 8th on the index, with high scores for its low investment amount, reasonable property costs, and crypto-friendliness. Demand for second homes and an increase in interest in beachfront apartments and purpose-built community areas have buoyed the property industry, ensuring that foreign investors, who can invest in residential or commercial units, find value and have a range of choices.
A further three Caribbean island nations occupy the next two rankings — Dominica and St. Lucia share joint-9th place on the index, while St. Kitts and Nevis is 10th by a narrow margin. All three island nations score highly for their affordable investment requirements (with minimum real estate investments of USD 200,000 to USD 300,000), absence of residence requirements, and crypto-friendliness.
More island escapes across the globe – Antigua, Malta, Jersey, and Mauritius
Antigua and Barbuda in 11th place enjoyed a strong tourism industry pre-pandemic, spurring many visitors to expand their real estate portfolios by acquiring property here. Malta follows in 12th place with its offering to allow the granting of citizenship by a certificate of naturalization to foreign individuals and their families who contribute to the country’s economic development, and real estate investment, whether purchase or rental, is a requirement. Further to the west in the Channel Islands, real estate acquisition in 13th-ranked Jersey, popular for its low rate of income tax and lack of estate duties, falls under Jersey law, simplifying processes and administration. And finally in 14th place is the multi-cultural Indian Ocean island gem Mauritius with a minimum real estate acquisition of USD 375,000, low property costs, fees, and duties, and no capital gains tax.
Group Head of Real Estate at Henley & Partners, Thomas Scott, says the premium sector of the global real estate market has shown significant growth over the past two years, with increasing numbers of investors opting for residence and citizenship by investment programs. “Aside from potential gains over the lifetime of the asset, an additional property can provide rental income in a strong and stable currency and offer geographical diversification via permanent residence or another citizenship, while at the same time offering distinct lifestyle or business advantages.”