Shopping for Residency
Buyers now get a lot more than bricks and mortar when investing in property abroad
By Alex Frew McMillan
When Hong Kong based property agent Chris Liem takes clients on trips to Portugal, they’re often looking to spend exactly €500,000 in residential or office property.And there’s a very good reason; under Portugal’s ‘golden visa’ scheme, that investment gives them the right to residencyWhat’s more, buyers accustomed to the high prices
in Hong Kong, Shanghai and Beijing discover their euro stretches a lot further. Most, if not all, of the clients in the small groups of five or 10 people that Liem accompanies snap a property up. “We have a very high strike rate,” Liem says.“For half a million euro, you can get something really amazing, right on the water, close to public transport, close to all the shops and the airport.” Having access to Portugal then opens up the whole Schengen visa region.That provides visa-free access to 22 European Union nations as well as Iceland, Norway and Switzerland.
One Portuguese lawyer, Maria Antonia Cameira, saysall the queries she has received about ‘golden visas’ come from the same place: China.“It’s the interest in becoming a European citizen or having free access to almost all airports in Europe,” Cameira says. Such ‘passport shopping’ is increasingly common, and it’s not just Portugal that is looking to shore up its economy by luring foreign capital into bricks and mortar. Not to be outdone, Spain brought in a carbon- copy scheme shortly after its neighbour, with the same spending requirement. Cyprus and Greece have also introduced similar schemes allowing residency through real estate. Perhaps as a sign
of how desperate the country’s economic position is, the Greek plan requires the least investment, at €250,000. Cyprus has set a threshold of €300,000. Property-industry insiders say investors have those figures at their fingertips when deciding where to buy. “The people who are doing it are very savvy,” says Chris Dillon, the author of Landed Global, a guide to investing in real estate in other countries for expatriate buyers.“They will literally sit down and compare the various options that are on offer and find the best deal for them in terms of liabilities and requirements.”
It’s also possible to go immediately to citizenship in countries such as Cyprus by investing five million euro into real estate. “There is a significant difference in programmes for citizenship and second passports versus permanent residency,” Gary Crates, the director of private clients at ECI Wealth Services, notes.The programmes are regularly updated and modified, he adds, requiring diligence to keep on top of them all. Second passports are popular with citizens of emerging-market countries such as in China, where government policy can change overnight. Malta will give you a second passport for purchasing around €250,000 in real estate. In Montenegro the magic number is €500,000. It’s US$312,000 in Cambodia. Certain Caribbean nations also allow direct citizenship through real estate investment, such as St. Kitts & Nevis (at least US$400,000), and Antigua & Barbuda (US$400,000), although Crates says both those schemes may soon undergo some changes to make them more attractive. Having been in effect since 1984, the St. Kitts & Nevis scheme is one of the longest-running in the world. Don Lockman, the director of sales and marketing at
the development Pelican Bay in St. Kitts & Nevis, points out,“As citizens of the Caribbean country, the property purchaser and his or her family have visa-free travel to more than 120 countries and territories.”
The investor must hold the property for five years, at which point it can be sold. But the citizenship is permanent, and also applies to a spouse, children under 25 and dependent parents over 65. “When you acquire citizenship under this programme, you and your family enjoy full citizenship for life, which can be passed on to future generations by descent,” Lockman says,“there’s no residency requirement.” Even well-established economies typically allow foreigners to attain residency – but not normally instant citizenship – through investment. In the United States, the process is called the EB-5 scheme. It requires investment into a property project of US$1 million in metropolitan cities or US$500,000 in areas that are considered underdeveloped.The development is also supposed to create 10 jobs.
The funds have to remain in the US project for five years.“The investors are basically lending the funds to the developer and should, in principle, get their funds back at the end of the loan,” Sam Van Horebeek, director of East- West Property Advisors, says. The investor can normally move to the US six to 12 months after making the investment by securing a ‘conditional green card,’ which allows a non-national to remain permanently in the US.The investor has to visit at least once a year to keep the green card active, although there’s no minimum stay required.
Patrick O’Neill, who with his brokerage O’Neill Group specialises in helping Chinese buyers find properties in the US, says many Chinese investors purchase property in two cities or more. Their main objective is to find somewhere ‘safe’ overseas to park their capital and plan for their children’s education. He recalls one couple who came to his office looking for a property near Stanford University, where their child would stay whilst studying medicine.When O’Neill asked how old their child was, the couple confessed the mother had only just got pregnant. But they wanted to get a head start. It can be a good idea to buy a rental property rather than a holiday home, and potentially get an agency to manage it. Pool maintenance, gardening and repairs all take time and effort. Dillon, the property author, has a friend who bought in Portugal but then found he had overestimated how much time he would spend there, and underestimated how long it took to get there. But for individuals seeking the many benefits associated with citizenship and residency, giving up a bit of leisure time seems a small price to pay, providing the destination is an enjoyable one for the investor.