International investing is a well-known strategy to increase diversification, reduce concentration risks and enhance return potential. While capital markets offer global exposure, equities are far from the only asset class that can provide international diversification. Enter citizenship by investment (CBI) programs or residency by investment (RBI) programs, which, while complex, offer international opportunities.
Still, for long-term investors, CBI investments can provide compelling global opportunities. The benefits of these programs, such as dual citizenship and increased global mobility, extend beyond traditional measures of return on investment. In addition to the benefits of an additional travel document, CBI programs have much to offer astute investors, including access to markets with strong fundamentals and potential for capital protection, income and appreciation.
Many elements must be properly managed, such as requirements, fees, regulations and laws, timelines and determining the best program to pursue. Given the intricacy of the programs, working with a legal expert will help to navigate the process quickly, compliantly and seamlessly.
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However, potential CBI investors can begin familiarizing themselves with program requirements and form their investment strategy now.
The opportunity set for investors
Investment immigration is the process of making a substantial investment in a foreign country to obtain citizenship or residency. Residency and citizenship by investment (RCBI) are two possible pathways of investment immigration. While the primary motivation for pursuing these programs is usually the citizenship or residency granted through these programs, traditional investors also consider RCBI programs for their return potential and diversification benefits. The popularity of the programs is rising, and the global investment migration market is poised to grow into a $100 billion industry by 2025.
Investors seeking long-term real estate opportunities can open the universe of potential investment markets by considering investing overseas. Often, real estate located within countries that offer RCBI programs will meet the preferred investment criteria of investors, such as growing markets and rental rates, improving infrastructure and appealing climates.
Business investments can also qualify investors for an RCBI program. These investments often appeal to entrepreneurs and business owners seeking international expansion, geographic diversification and currency risk management (including cryptocurrency). Business investors often receive preferential support and a beneficial regulatory environment, depending on the country they expand or relocate to. Investors may also receive potential tax advantages, greater asset protection and currency diversification, which can strengthen an investment case. Working with legal professionals who specialize in international investment strategies helps to mitigate risks and ensures investments are fully compliant with any in-country regulations and tax regimes.
These programs also provide the value of dual citizenship or residency, and the benefits of obtaining citizenship abroad can alone make CBI a worthwhile investment. Over 750 million people worldwide would be willing to migrate to a new country if they could. The reasons for this are varied but often include better career prospects, political protection or preference, greater global mobility and improved educational prospects. The potential return on these benefits makes for a compelling case to pursue CBI via government fund donation or 0% interest bonds.
The Caribbean: An example of strong investment fundamentals
Of the countries that offer CBI, the Caribbean region may provide the most ample and compelling opportunities. Favorable climates and flourishing tourism have boosted the region’s real estate. Caribbean real estate markets are projected to grow at a 4.77% annual rate through 2028. Several high-quality Caribbean CBI programs have produced successful real estate ventures, with investors flocking to the luxury condo and resort developments approved by CBI programs with flexible residency requirements. Crypto-friendly Antigua and Barbuda, for example, provides popular real estate investment opportunities, including beautiful high-end properties with oceanfront views (which can often be purchased with cryptocurrencies) and a reasonable five-year holding period requirement.
The popularity of the Caribbean’s CBI programs has recently resulted in more scrutiny and, as a result, increased regulatory harmonization between countries. For example, in 2023, four out of five Caribbean countries with CBI programs (Antigua and Barbuda, Dominica, Grenada and Saint Kitts and Nevis) approved a regulatory framework that standardizes a pricing floor for investment ($200,000) and enhances transparency, security and reporting requirements. The shared commitment to regulation and transparency are positive steps for retaining and improving regional investor trust. Historically, discounting schemes within CBI programs resulted in applications from a less-than-committed investor base. The price floor ensures that investors pursuing Caribbean CBI programs are committed to the region’s investment opportunities.
If the Caribbean doesn’t provide the right opportunity for an investor, several European countries offer RBI programs with a pathway to citizenship. Like programs in the Caribbean, real estate or business investments may qualify an investor for a residency program. The U.S. and Canada even offer permanent residence through business investment, though the minimum capital commitment is generally higher than other programs.
Immigration investment risks
Like any investment, RCBI programs present risks that potential investors must carefully consider. Liquidity risks should be weighed, as investments often come with stringent holding periods, limiting investors' ability to access their funds in the short term. Moreover, prolonged application processes can tie up capital for extended periods, exacerbating liquidity concerns. Emerging market risks further compound these challenges, as economic and political instability in some countries could jeopardize the value of investments and the stability of citizenship rights.
Additionally, geopolitical uncertainties and changes in legislation could impact the viability and longevity of CBI programs, underscoring the importance of thorough due diligence before engaging in such ventures. Overall, while CBI programs offer unique opportunities for acquiring citizenship, investors must accept or mitigate some level of risk to safeguard their financial interests.
Investment immigration can present a compelling investment opportunity for investors with the appropriate tolerance for risk. Obtaining legal advice helps ensure that the program selected is most suited to the client’s needs. Legal professionals, such as lawyers, help protect the client’s confidentiality and funds, increasing the likelihood that an immigration investor achieves their objectives.
Related Content
- International Stocks: Time to Explore Investments Abroad
- The Argument for International Equities
- 1031s: Minimizing the Tax Burden on Investment Property
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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