RESIDENCY-BY-INVESTMENT
High Net Worth Hobbies
Trends on the rise
BY NICOLE DOUGLAS
The high net worth( HNW) landscape and movement of wealth are changing, driven by the lure of residency-by-investment programs for tax efficiency and lifestyle opportunities. With 74 countries around the world offering residency-byinvestment programs, there are endless opportunities for those willing to put their money where their mouths are. Other than the clear benefits for investors, these programs are also important economic drivers in the countries of investment, oftentimes creating local business and contributing to cultural research.
Considering this, it can be expected that there will be an increase in countries offering these programs, in a bid to take advantage of HNW investors’ wealth. As a result, investors are presented with a marketplace of sorts, with a wide variety of programs to choose from. Due to this increased competition, programs that prove to be ineffective or unattractive will either be updated or suspended.
An example of this is the UK leaving the EU. It can be expected that this will bode well for countries in the trading bloc. Similarly, the bond program in Hungary closed in April 2017, proving that those that aren’ t sufficient in bringing about an economic benefit will fizzle out.
According to our Global Wealth Market Analytics,
the world’ s HNW population exceeded 8.5 million in 2016, pointing to a rapid growth of this once ‒ elusive market. It is anticipated that countries will explore the creation of tiered programs, whereby greater investments yield expedited residency.
For example, a $ 1m investment may enable an individual to obtain residency in five years while a $ 2m investment may constitute residency in three years. These tiered programs will pique the interest of HNW individuals who have the desire to obtain residency quickly and have the assets to qualify.
Regardless of the required investment or whether they are tiered, wealthy investors from emerging markets will continue to drive the residency-by-investment trend. As emerging markets tend to experience political and economic instability, individuals from countries such as China and South Africa will explore opportunities for obtaining residency in markets abroad.
Looking ahead, residency will become an integral component of HNW portfolios and a useful factor for measuring market confidence. In short, the movement of people will become a stronger indicator of the movement of wealth.
Nicole Douglas is a Wealth Management Analyst at GlobalData
46 AUGUST 2017 SA Real Estate Investor www. reimag. co. za