By Uglobal Staff
Even though New Zealand has made major changes to its Investor Categories visa, including doubling its required investment amount from NZ$1.5 million to NZ$3 million, applications are still going strong.
Other changes include increasing the annual visa quota from 300 to 400 in May of 2017. The program also underwent adjustments to add incentives to growth-oriented investments for the investor visa categories, including removing the required NZ$1 million settlement funds and requirement of English language proficiency and business experiences for Investor 2 migrants.
Immigration statistics provided by New Zealand’s Immigration Ministry shows a greater impact brought by the announcement of the change in December of 2016 than by the official launch of the new policy in May of 2017. The number of applications plummeted from 92 to 34 from November to December, 2016 but then bumped to as high as 204 before the official effective date. Then, numbers gradually fell back to 165 in June 2017, which is about the same level as in the same time period of last year.
“The immediate change (after the announcement) has been a reduction in Investor 2 applications but this will change once the new policy settles in,” said Chris Noakes, Licensed Immigration Advisor from Malcolm Pacific Immigration, an immigration service provider based in Auckland and Wellington.
The trend could partly be attributed to the removal of settlement funds in the new policy, which largely neutralized the impact of the price hike. Previously, investors needed to secure a total of NZ$2.5 million (NZ$1.5 million investment funds and NZ$1million settlement funds) with legal sources in order to be eligible. With the change, investors now need to secure NZ$3 million for the application, but don’t need the extra settlement funds. This means only a NZ$ 500,000 difference in investment capital.
“The price increase is not significant,” said Richard Wu, founder of Bestmore Consultants Co. Limited and a Licensed Immigration Advisor. “Many of my clients came to us with at least NZ$3 million available even before the policy change.”
With the changes, the government hopes to bring larger economic benefits to the country’s economy.
“The government believes there is an opportunity to rebalance this (investment) towards growth-oriented investments,” said Michael Woodhouse, New Zealand’s Immigration Minister, in a press release. “These changes will encourage them (investors) to do so earlier in the process while incentivizing investments that deliver greater economic benefits for New Zealand.”
MIGRANT INVESTOR CATEGORY OF NEW ZEALAND
Since its establishment in July 2009, the Migrant Investor categories has achieved a total of NZ$2.9 billion in investment for New Zealand’s market and a committed further investment of NZ$2.1 billion, according to Woodhouse. The Migrant Investor categories provide two options for investors who want to obtain residence in New Zealand. The Investor 1 category route requires applicants to invest NZ$10 million and meet the physical residence condition. A less cost-demanding option is the Investor 2 visa, which now requires a NZ$3 million. However, the applicants of this category must first submit an expression of interest, which is subject to the scrutiny of the Immigration Ministry of New Zealand. Not until an invitation is issued can the applicant initiate the application process. A minimum of 3 years of business experience, an age limit of less than 65 years and proof of English language proficiency for both the principal and secondary applicants are required for the applicants of Investor 2 Category. A more stringent physical residency requirement during an investment term of 4 years is also applied to this category.
According to Mark Williams, partner at Lane Neave, one of New Zealand’s leading firms for legal services, the length of processing time for Investor categories depends on the risk profiling of the applicant in question, which can range between 10 to 60 working days for Investor 1 applicants and 60 to 120 working days for Investor 2 applicants. Case volume and staffing at the time of application also influence the processing time. Acceptable investment includes residential property development, commercial property, philanthropic investment and growth investment. Typically, applicants start with conservative investments such as government bonds and blue chip New Zealand company equity. At the end of the 3-or-4-year investment term (depending on categories), applicants who have complied with all conditions and have successfully completed their investment, would secure a permanent resident visa, which allow them to live, work, study and travel in New Zealand indefinitely.
In the 2016/17 fiscal year, 1089 foreign investors were granted residence under the Migrant Investor Category, an 87 percent increase comparing with the last fiscal year. More than 75 percent of these investors came from Mainland China. This group of investors has been the largest applicant group of the Migrant Investor Category for five consecutive years. Following Mainland China, the U.S. has increased as an emerging market for New Zealand’s investment immigration. American applicants of the Migrant Investor Category have more than doubled in the 2016/17 fiscal year comparing to the last fiscal year, according to statistics by New Zealand’s Immigration Ministry.
“In the USA (in particular) we have seen a strong growing demand for these visas since the final quarter of last year,” said Williams.
ENTREPRENEUR VISA ROUTE OF NEW ZEALAND
Experienced businesspeople have another pathway towards New Zealand residence through a two-step process. With a minimum investment of NZ$100,000, an elaborative business plan and a clean business history, investors with business skills will be able to apply for an Entrepreneur Work Visa, which grants a 12-months stay in the start-up stage and another 24-months stay in the balance stage to establish the business. During this period, investors can only work for the business named on the visa. After running the business successfully for at least 2 years, applicants become eligible for an Entrepreneur Residence Visa. With a provable commitment of living in New Zealand, applicants who have been holding an Entrepreneur Residence visa for a minimum of 2 years will be able to apply for permanent residency.
However, many New Zealand Immigration attorneys and licensed immigration advisors suggest that investors should be very cautious about the Entrepreneur Visa route. The complexity of the application process, the uncertainty of outcome and the significant risk of being declined all contribute to their concerns.
“The Entrepreneur Category requires the applicant to be actively involved in the management of New Zealand business…this involves a lot of time spent in New Zealand and the risk that residence may not be granted if the business fails,” Noakes said. “The decline rates under this category are typically around 70 percent.”
Williams also provided similar suggestions regarding the choice between the Investor route and the Entrepreneur route.
“The Investor polices are clearly the best options to pursue for simplicity and certainty of outcome,” he said. “The entrepreneur policy is the option of last resort. If a client can qualify for both, we always recommend the investor pathway.”
WHO ARE ELIGIBLE TO PROVIDE IMMIGRATION SERVICES IN NEW ZEALAND?
Under the New Zealand immigration law, those who provide immigration consultation services must be licensed by the Immigration Advisers Authority (IAA). New Zealand lawyers, staff from the citizen advice bureau and several other categories of service providers are exempt from IAA’s licensing restrictions. While New Zealand lawyers provide guidance on legal matters associated with the immigration process, licensed immigration advisors generally help investors understand the immigration process and requirements of the New Zealand government. Some of them also work with financial advisers to help select investment targets and set up portfolios.
Despite of the substantial price hike of the Investor 2 Category, professionals are optimistic about the development of New Zealand’s Investment Immigration market.
“The living environment and life quality here in New Zealand make it a very competitive investment immigration destination,” Wu said. “The application challenge facing investors is small, the risk associated with the investment is low. Now the demand in the real estate market is particularly high… For investors with a medium level of English language skills and who are familiar with the country, New Zealand is a good place to start a new life.”