Demand for investment into property-linked second passport residency programmes has spiked despite the travel restrictions brought on by the global Covid-19 Pandemic according to Ms Nadia Read Thaele, MD of LIO Global, a leading specialist firm in second residency and citizenship by investment planning.
The reason is two-fold. Firstly, the unexpected Covid-19 onset and then the consequent global economic slump. While it was expected that global growth would slow in 2020, no-one expected it to be so sudden and that, off the back of a global health emergency. It has caught many investors off guard she, says.
Secondly, for South Africa’s wealthy, the effect was compounded by Moody’s final downgrade on the 27th of March, just as the devastation on the local economy began to sink in and the length of the national lockdown became a reality.
Stock volatility and the oil crisis, which has seen the oil price fall right through the floor means that individuals, not just in SA but globally, are on edge and urgently looking at realigning their investment portfolios and ensuring they have planned appropriately for the their family’s future. Residency and citizenship planning has become more important than ever as family’s look at diversifying their citizenship.
One way that South Africans are looking at this, is investing in Residency or Citizenship Programmes linked to property, she says, While the Rand has lost just over 20% of its value, making these programmes more expensive, this is negated by the significant capital growth and many investors are using funds already offshore.
Had you for example invested in a Residency Programme with a property into a Caribbean island country such Grenada for USD350 000 at the start of the year when the USD/Rand exchange rate was at around R14, you would have invested about R4,9 million. This investment is equivalent to what a upper-middle income house in SA would cost you and well below what you would pay for an apartment in Clifton or Camps Bay.
By mid-April, the decline in the Rand to around R18.8 to the US Dollar means that your investment value now stands at around R6,58 million, a significant 34% growth in a matter of 4,5 months.
Additionally, in most instances, the property on offer as part of the Residency Programmes can be leveraged for short- and long-term rental returns, adding further to the attraction.
On top of that the Grenada Programme is one of the few with a fast, 4-6 month route to citizenship which will give you visa-free access to 140 countries including the UK, China and Schengen region, a significant benefit for any South African, she says. It also has the added benefit of the E-2 Visa treaty with the USA, which allows citizens of the Grenada the option to invest and reside in the USA, should they want to.
In the Caribbean, countries such as St Kitts & Nevis, St Lucia, Antigua, and Barbuda offer particularly attractive opportunities. Your property investment of between USD220 000 and USD350 000 could provide citizenship of one of these states centrally located near the Americas.
Malta, Portugal, and Cyprus provide access to the EU, although investment requirements are significantly higher, starting from around EUR 1 million for a family for citizenship. Investors will need to keep an eye on Brexit developments as the UK is expected to pass a law by year-end requiring Eurozone passport holders to obtain a visa to work or live in the UK long term.