By Uglobal Staff
There is an increased demand among the world's wealthiest individuals to obtain a second passport or legal residency beyond their home country, according to the newly released Wealth Report by Knight Frank.
More than 25% of the world's ultra-high-net-worth individuals (UHNWI) are looking for a second passport, according to the report. Of that demographic, many were based in Asia and, within that continent, most were from China, which is forecast to have a 246% increase in very wealthy residents by 2025.
Countries with citizenship-by-investment (CBI) programs and other investment-based immigration options — sometimes dubbed "Golden Visas" — may continue to experience rising concerns and tensions within their programs, Knight Frank researchers predicted. They pointed to Malta — the tiny EU member-state that offers Golden Visas — that hit a cap of applications before reopening its program under more stringent requirements. They also pointed to Cyprus' immigration investment program, which has also faced European Union scrutiny.
"A trend that we may see more of is a greater emphasis on employment or increased residency requirements as these programs evolve," the report stated.
On the flip side, many nations with CBI and/or residency programs are going all in. These countries have a special need for foreign capital as governments face record debt levels or other needs during the economic downturn. Countries in this category include Caribbean nations: Antigua & Barbuda, Dominica, Grenada, Saint Lucia, and St. Kitts & Nevis. Their passport programs are said to be worth $25 billion American dollars annually, according to the report.
Working remotely is becoming the new norm
Researchers noted how digital nomads — people who can work anywhere because their jobs can be done on the internet — are also being wooed by some nations. Barbados, the tiny eastern Caribbean island, in an attempt to boost its pandemic-burdened tourist economy, started a 12-month "welcome visa." That effort saw 2,000 applications between July and November 2020, and was so successful that other Caribbean markets are emulating it, as is Dubai, according to the report.
"With the COVID-induced advent of more flexible and mobile working patterns, we are likely to see demand increase further," the report stated. "And in a post-pandemic world where mobility, or lack thereof, has been put in the spotlight, we are unlikely to see a reluctance to partake."
A change in the status of various passports around the world
This surge in second passports is happening simultaneously as some of the world's once-strongest passports — namely for citizens of the United States and United Arab Emirates — lose their luster amid travel restrictions that could linger as the COVID-19 pandemic continues into 2021.
Specifically, they pointed to the U.S. passport, which at the start of 2020 empowered its holders with visa-free access to 171 countries. One year later, that dropped to 103 countries. Similarly, the UAE passport slipped to 14th place after being ranked the top passport in the world. Knight Frank's passport assumptions relied on the global mobility rankings of the Passport Index, compiled by Canada-based Arton Capital.
Lack of travel power is even causing U.S. citizens to seek another passport or residency elsewhere, researchers say.
New trend of American HNWIs seeking second passports
Rogelio Caceres is the founder of Global RCG, a Miami-based firm that caters to Americans wanting foreign-country residency or second passports. Thus, from his Florida perch he has a unique perspective: working with Americans seeking to branch out, rather than foreigners immigrating into America.
"Traditionally, the U.S. is a receiver," he said. "But during the last few years, the rise of social unrest in the country has made Americans increasingly concerned. This is born of widening economic and social divisions in the country. We think the need for a plan B is becoming a necessity for UHNWI in America."
Like researchers say, Caceres sees remote workers are boosting the industry. He also sees entrepreneurs becoming wealthier at younger ages and families wanting to give their children multiple nationalities — which translates to multiple passports — so they have as many open doors as possible.
"As with every crisis comes collapse and opportunities," he said of the post-pandemic market. "We will see fragile businesses exit the market and those that haven't taken the technological leap will have difficulties getting back up. But as it was for the 2008 financial crisis, new programs will be created and the existing ones will work on becoming more competitive. That's a win for the industry."
Investment immigration is an opportunity to jumpstart hard-hit economies
Tyrone Siren is the director of Pearl Bay Consulting, based in Hong Kong with other offices throughout Asia.
He sees the markets in China and Vietnam as cooling down, while the Middle East heats up.
"I try not to look at the industry as monolithic, but rather as smaller regions,” he said. “Each of these regions has particular demands."
Unlike in previous years, he saw that people from countries that handled the coronavirus pandemic better — namely China, Vietnam and Taiwan — were "not in a rush to migrate this year."
In 2021, Siren predicts the Asian markets to reopen.
"Beyond that, the industry will continue to grow and the client base will become more diverse and be located all over the world," he said. "As projects and service providers, we need to think about much more globally and develop new strategies. This is also an opportunity for many countries to use investment migration to jumpstart their economies."
How the pandemic has impacted the RCBI industry for HNWIs and professionals
Mary Tsiganou, vice president and a financial and legal consultant for Energopiisi SA Investment Consulting Services in Greece, said she sees the investment immigration business as focusing less on visa-free travel "and more on where you can live with a high quality of life, with a decent health care system, surrounded by people whose culture and outlook on life you feel comfortable with."
"We all witnessed a paradigm shift during the last few months,” she said. “The pandemic has forced all of us to review our definitions, preferences and priorities in life."
Sara Sousa Rebolo, a partner with Caiado Guerreiro, a law firm in Portugal, agreed.
She pointed to 2020 and 2021 as "years of great opportunities to make new contacts all over the world, as people were in that disposition and happy to speak over video calls. The digitalization of some procedures was also positive."
Tsiganou said the pandemic has also increased demand for second passports.
"COVID-19 has certainly acted as a driver of growth, putting a spotlight on the many benefits of strategic residence and citizenship planning," she said. "However, even during the two years preceding the outbreak of the pandemic, we had already seen positive developments, with investment migration maturing from being a luxury lifestyle product to a sophisticated investment choice. Necessity has seen the investment migration industry prevail, and with global demand and supply continuing unabated and tighter regulation in 2021 and beyond, investment migration will remain a firmly established mainstream player."
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