Tahir Mahmood talks to Dominic Volek, Group Head of Private Clients at Henley & Partners about the emergence of Investment Migration through ‘residence-by-investment’ (RBI) and ‘citizenship-by-investment’ (CBI) programmes, and how, if you’re looking to make a move, they could play into your decision making.
The rise in Investment Migration.
In an increasingly unpredictable world, it has been noticed that the desire and necessity to secure greater global access and choice has skyrocketed. Investors from emerging and advanced economies alike are seeking out alternative business, career, educational, and lifestyle opportunities on a global scale, enhancing their options and transcending the constraints imposed on them by their countries of origin to improve the resilience of their portfolios and ensure physical and financial longevity.
Acquiring alternative residence and/or citizenship by participating in reputable investment migration programmes can enable greater flexibility and participation in the world’s leading economies, as well as optionality which is fast becoming an essential part of any family’s insurance policy for the 21st century.
How do RBI and CBI programmes work?
At the time, the first modern investment migration programmes were developed, the industry was largely unformed, unknown, and unregulated. The number of programmes is increasing steadily as governments tap into their potential to boost capital and talent inflows. The past year has seen the investment migration industry move into the mainstream and it is now an established and fast-growing feature of the global economic landscape, endorsed by significant players such as the UK and the US.
Investment migration enables wealthy individuals to acquire alternative residence or citizenship in another country in exchange for a significant economic contribution to that country, whether in the form of a capital transfer, a donation, various investment options, real estate acquisition, or establishing a business that will create employment.
These programmes are designed to manage the combination of risk and opportunity for investors by simultaneously diversifying the distribution of assets and permitting access to a significantly expanded set of possibilities for investment, global influence, and travel as well as residence in a country of their choice for those who wish to relocate temporarily or permanently.
What are the differences between RBI and CBI programmes?
- RBI programmes provide HNW investors with the option of physically relocating and the right to live, work, study, and receive healthcare in their new countries of residence.
- CBI programmes provide the privilege of acquiring alternative citizenship, which in turn enables greater travel freedom and the right to settle in another country, or in certain circumstances multiple countries.
More than 100 countries have some form of investment migration legislation in place.
Has COVID-19 affected how individuals think of RBI and CBI programmes?
The simple answer is Yes.
Before Covid-19, investors chose where to reside based on somewhat predictable factors such as quality of life, access to education, and travel freedom. Now the big drawcards are safety and security, access to first-class healthcare with strong capacity, reliable infrastructure, pandemic preparedness and management, good airlinks, and most importantly — better prospects (education, employment, quality of life) for their children and grandchildren.
The significant volatility that is being experienced globally in terms of both wealth and lifestyle has seen alternative residence and citizenship shift from being ‘nice-to-have’ assets of convenience and privilege to becoming ‘must-have’ essential assets, to thrive in a changed world. Investment migration can be used to hedge ongoing volatility and facilitate both wealth portfolio and holistic lifestyle diversification that creates significant new value.
Investors recognise that investment migration products can be used to add impetus to their wider wealth planning and legacy management strategies to protect against further downside and to create new value and enhance personal happiness and wellbeing. Many sovereign states that host investment migration options offer levels of comfort and security that for much of the world have been severely challenged by the current crisis and the geopolitical turmoil that has erupted in many countries, both highly developed and developing, in recent times.
An investment in sustainability — For investors and host nations
Investment migration programmes create significant sovereign and societal value by delivering a source of sustainable liquidity that provides monetary and fiscal autonomy as it is an equity injection, not increased leverage. This can be used to drive economic growth and core infrastructure development, enhancing the lives of all citizens. This immediate and debt-free mechanism for raising capital is much needed as nations worldwide grapple to recover from Covid-19.
The host nation–investor relationship is mutually beneficial: many investment migration countries provide safe and peaceful alternative environments for affluent individuals seeking to safeguard their families, who in turn contribute to their chosen destination in terms of their capital, talent, and wealth.
Written in conjunction with Dominic Volek, Group Head of Private Clients at Henley & Partners
