While, predictably, the pandemic has triggered a sharp increase in demand for citizenship by investment, unpredictably, coronavirus has changed the who, why and where of the CBI landscape, with applicants from unexpected countries surging, reasons for economic citizenship changing, and some CBI countries really standing out from the citizenship crowd.
The pandemic passport is rising. So say the industry experts and so speak the numbers. World-leading global citizenship advisory firm, Henley & Partners, has witnessed a 47% spike in CBI enquiries between Q1 and Q2 2020, while leading Middle East immigration firm Citizenship Invest has seen a steep increase in enquiries during the pandemic.
And then there’s the individual CBI Programmes. While Montenegro saw a 142% spike in CBI applications during Q1 of 2020; in May 2020, Portugal received a record number of applicants to its residency programme (270 applicants spent €146.2 million); and Turkey approved twice as many second passport applications (1,333) in the first three months of the pandemic than its previous highest.
Ironic, right, considering that during the height of the pandemic, the passport has been the least used it has ever been. The numbers are certainly not unexpected, however, as in times of crises, a second (and strong) passport is the ultimate insurance policy.
“Covid-19 has triggered a sense of urgency, especially amongst those with restrictive nationalities who live in unstable countries,” explains Veronica Cotdemiey, CEO of Citizenship Invest.
It’s a given, therefore, that the massive volatility and subsequent fall-out from the global pandemic – health crises, economic downfall, job losses and stunted global mobility – would lead to people from all over the world re-evaluating their situation and reconsidering how they wish to move forward with their lives. And for those who are fortunate enough, choosing where they want to live.
According to Dr Juerg Steffen, CEO of Henley & Partners, many people “are taking stock and ensuring they are better prepared for the next pandemic or major global disruption”. He adds: “The relentless volatility in terms of both wealth and lifestyle has resulted in a significant shift in how alternative residence and citizenship are perceived by high-net-worth investors around the world.”
It’s not surprising of course that the pandemic would trigger a sharp increase in demand for alternative CBI programmes among HNWIs. What’s less predictable is the why, who and where of the situation.
The who of citizenship by investment has changed
The CIP clientele has changed in the post coronavirus era. It’s no longer just the ultra-high-net-worth or high-net-worth investors purchasing second passports. With the ability to now work remotely, along with the affordability of some CBI Programmes (during Covid, the five CBI Caribbean governments reduced their prices by an average of 20%), the pandemic has given those earning middle incomes the chance to secure economic citizenship too.
And while pre-pandemic, demand for economic citizenship tended to hail from more predictable sources – HNWIs from less developed or politically and economically less stable countries and regions such as the Middle East, Africa, Russia and China – since the pandemic emerged, there has been a significant and somewhat surprising increase in demand from more developed countries, including the US and the UK; countries in fact where the pandemic has hit hard and where political instability (the presidential election and Brexit, respectively) is furthering the chaos.
In fact, Henley & Partners has seen a dramatic 100% increase in enquiries form US citizens in the first six months of 2020, compared to the same period in 2019, as well as seeing the US show the biggest spike in applications over the past nine months. Research by Bambridge Accountants New York backs this up. In 2020, Americans are renouncing their citizenship at the highest levels on record, a 1,210% increase in the first six months of 2020, compared to the prior six months up to December 2019.
“Perhaps the most remarkable Covid-related shift… was the huge spike in enquiries from Americans along with growing interest from Canadian and UK nationals,” states Henley & Partners.
The why of citizenship by investment has changed
And with the ‘who’ having changed, the ‘why’ has also changed. While pre-pandemic, the majority of applications for CBI came courtesy of HNWIs wishing to increase their global mobility, allowing them to access better business opportunities, as well as take advantage of advantageous tax benefits, the reasons in the post pandemic era are different, with safety, healthcare, peace, protection and pandemic responses taking priority, and individuals utilising second citizenship to prep for another outbreak.
Dominic Volek, managing partner of Henley & Partners, says people today are “concerned about healthcare and pandemic preparedness because, of course, this may not be the only pandemic in our lifetime”.
Of course, freedom of movement does remain a key reason for securing citizenship, but now, in 2020, from a very different perspective. In the age of Covid, many HNWIs are looking to economic citizenship as a way of escaping the current border shutdowns, investing in passports in order to increase their chances of beating travel bans in the future and to ensure they continue to have a powerful passport. After all, the once powerful passports of the US and western Europe have lost a little of their shine.
Konstantin Kaminsky, associate director of leading immigration investment provider, Astons, which has seen a huge increase in enquiries for CBI since the pandemic hit, explains that “the wealthy in poor countries have found themselves stuck at home in the midst of an epidemic, even though they are used to seeking treatment abroad”. And they want, and need, that mobility back.
As well as looking to economic citizenship in order to escape their own country’s limited freedom of movement (driven by the pandemic), applicants are further looking to escape their own country’s handling of, and response to, the coronavirus, thereby seeking to secure citizenship of a country which has not only handled the crises well (shut down borders early and kept cases and deaths to a minimum), but that can subsequently deliver an excellent standard of healthcare to deal with such a crises.
Professor Dr Yossi Harpaz, Assistant Professor of Sociology at Tel Aviv University, points out that “in the coming months, we anticipate even more applicants from countries that have not been able to control the spread of the virus adequately”.
Finally, and most crucially, rather than simply utilising second citizenship for the freedom of movement and the tax benefits it brings (something that’s been a significant reason for second passport purchase in the past), many individuals are now looking for economic citizenship of a country in which they would actually like to live and work (especially as remote working is now possible). So, in addition to quality of life, a good lifestyle and excellent education, clean air, a safe environment and decent healthcare also matter.
“Covid-19 has prompted a noticeable shift,” Dominic at Henley & Partners told Antigua & Barbuda’s The Citizen publication. Second passports, he explains, “are now becoming ‘must-have’ essential assets because of the undeniable benefits they bring”.
While pre-Covid, people chose where to reside based on quite predictable factors such as quality of living, access to education and safety, “in the future, they will also consider factors such as reliable infrastructure, self-sufficiency, access to good healthcare, reliable air links for hasty repatriations and effective handling of crises scenarios”. In short, countries that have handled the current crisis well will gain in popularity.
The where of citizenship by investment has changed
And that’s exactly why there has recently been a surge in enquiries and applications to the countries that have managed to curtail the crisis.
The Caribbean nations, for instance, all of whom have seen consistent and increased interest in their CBI Programmes during Covid, have managed to maintain incredibly low case and death rates throughout the pandemic. Four out of five of the Caribbean CBI countries had no Covid-related deaths, while the one that did, Antigua & Barbuda, has recorded just three deaths, with recorded cases across the Caribbean CBI islands ranging from as low as 19 cases to just 101 cases.
Nuri Katz, founder of global financial advisory firm Apex Capital Partners, told CNN Travel in August, “these small countries seem to be opening up and there’s a feeling that they’ll be able to manage the problem a lot better than big countries”.
The surge in interest of these Caribbean CBI Programmes during Covid has been helped of course by the fact that a number of them have either dropped the entry price of their CIP (Saint Kitts dropped its price by 23% to US$150,000 for a family of four, while Saint Lucia and Antigua & Barbuda also offered discounts) or made amendments to their dependent clause making economic citizenship more affordable for families.
Another small CBI country, though this one in Europe, whose competent handling of coronavirus has led to a surge in applications is Montenegro. This small Balkan country was praised for its timely and thorough response to the pandemic (the country took pre-emptive measures to close its borders to the rest of Europe in early March) and managed to maintain a mainly Covid-free environment including one of the lowest death rates in Europe. As such, Montenegro, whose CBI Programme is just one year old, saw a 142% spike in applications in the first quarter of 2020 (during the pandemic), compared with the fourth quarter of 2019.
A larger country in Europe, Portugal, also delivered a quick response to the crises, resulting in a relatively low number of deaths (just 1,971 compared to neighbouring country Spain’s 31,791), and this led to the country receiving a record number of applicants for its residency programme in May 2020, according to Global Citizen Solutions. “The lockdown period for us was abnormally busy,” says Patricia Casaburi, CEO of Global Citizen Solutions.
Ultimately, whichever country is chosen, the pandemic, which shows no sign of dying just yet, has not only triggered a surge in demand for citizenship by investment, but has changed the landscape of the industry, with a different clientele, different reasons and different countries doing well, and it’s likely this will only continue.
In 2017, Nuri Katz estimated that some 5,000 people per year had acquired citizenship overseas via CBI Programmes, in 2020, he predicts that number will be closer to 25,000. Only time will tell…