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