End times: Residency may be the best investment you can make
Globally, the coronavirus may have spurred extra interest in an unusual safe haven investment — one that provides citizenship or residence in a preferred country.
The spread of the pneumonia-like disease now named COVID-19 has kicked up interest among wealth managers and high-net-worth (HNW) individuals in investment migration programs, says Jurg Steffen, chief of UK citizenship planner Henley & Partners.
“Investment migration programs enable countries to grant residence or citizenship rights to individuals in exchange for a substantial investment” he said.
“The current market turbulence and increased political risks – not least also connected to the coronavirus outbreak – is accelerating the momentum for wealthy individuals to include alternative residence and citizenship as a necessary component of their portfolios — one that can expand their footprints and market reach, offer them greater mobility and additional opportunities, and protect them from the dangers of volatile markets and political instability.”
Chao Yao, an Australian resident from China whose family company has been investing in Australia since 2015, told Stockhead the coronavirus is likely to have sharpened the urgency for any high net worth individuals in China to diversify their portfolios outside the country, both for business and for residency reasons.
In Australia, non-residents can buy their way in with a significant investor visa (SIV) by promising to invest $5m for at least four years, and receive permanent residency if they spent at least 40 days here a year.
If they’re already here on a separate visa, there are a few more hoops to jump through but a $1.4m investment over four years will suffice.
Other options are a visa for owners of businesses in Australia (it must be making at least $500,000 a year) or an entrepreneur visa for people who have venture funding of at least $200,000.
In 2015, the program was changed to move investment away from property — a preferred option for cautious Chinese investors in particular — and towards venture capital and emerging companies.
Combined, about 7000 of these visas are granted each year; 183 SIVs were granted in 2017-18 with 87 per cent of those going to Chinese nationals, according to stats from the Home Affairs Department.
One hundred countries have investment visas for foreigners. Since Australia started its own in 2012 the system has led to $11bn in direct investment, according to stats from Moelis Australia.
Citizenship-by-investment contributes about $US3bn ($4.5bn) a year to the global economy, while the residence-by-investment sector contributes about $US15bn a year, says Henley & Partners data.
The benefits of having residency in more than one country became very clear when governments began managing their response to the COVID-19 outbreak, which has infected over 72,000 people in China, a handful around the rest of the world, and killed nearly 1900 people.
Governments have been closing their borders to non-residents and citizens who have travelled to mainland China, including Australia which extended that quarantine last week.
Citizens and residents, however, are allowed to return to Australia but are asked to place themselves in quarantine for 14 days.