Acquiring property remains a sound long-term financial strategy while also affording second residency and travel rights
Property-linked investment-for-residency programmes have proven their value to investors with decades of financial returns as well as offering the attraction of relocation, retirement and travel. Rental yields and globetrotting opportunities combine with the core asset value to deliver a strong hedge against economic and political volatility for the forward-thinking investor. Indeed, physical assets continue to prove their advantage over stocks and shares, especially during global upheaval.
European real estate proves a resilient investment solution
Acquiring property in several European countries opens the door to secondary residency and citizenship. This enables wealthy individuals to develop a diversified portfolio while contributing to a regional European economy.
Dr Juerg Steffen, Chief Executive Officer of the London-based global citizenship and residency advisory firm Henley & Partners, highlights the benefits of property-linked European residency and citizenship schemes. He explains that: “Investment migration is a win-win solution for global investors and sovereign states alike. High-net-worth individuals (HNWs) favour European real estate-linked programs since they offer a unique hybrid investment opportunity. They include multiple yields from real estate — with all its traditional upside — and an alternative residence or citizenship, including the option to relocate if needed.”
Cyprus investment residency programme remains one of the most desirable choices
Cyprus offers one of the continent’s most attractive migration-by-investment programmes. For investors, it creates a base of operations in Europe with the added benefit of its Mediterranean location. This makes it a highly desirable option among investors.
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Henley and Partners Global Passport Index Quarter Two Update reveals that the Cyprus property investment migration programme grew by a staggering 250 per cent in quarter one this year compared with the same period in 2019. The scheme clearly continues to attract investors while generating a substantial inflow of wealth into the island nation at the same time. Perhaps more significantly are the jobs the programme generates as well as the shoring-up of the country’s economic stability.
Greece remains one of the most cost-effective and popular residency programmes
Residency through investment is available in Greece through acquiring a property of €250,000 making it far more attractive to many investors compared with other European residency programmes. Regardless of the challenges would-be investors have recently faced — including the inability to conduct in-person property viewings and interviews — the country’s residency-by-investment scheme continues to be a popular choice. The more prudent investors will likely resume property searching as the Mediterranean nation gradually reopens and its winds up economy once more.
Portugal’s Golden Residency Permit Programme continues to attract investors
Portugal continues to build its status as the European hub for international property investment. According to the Henley and Partners Q2 Update, interest in the Golden Residence Permit Programme (GRP) rose by 25 per cent in the first quarter of the year and by nearly 50 per cent compared with the same period in 2019.
The nation’s property sector is experiencing sustained growth as well, thanks in part to foreign investors ranging from large institutions to HNWs. Luis Infante, Managing Partner of Henley and Partners Portugal, expects that: “Portugal will continue to be a hotspot for real estate investment.”
Interestingly, government statistics from the Iberian nation point towards the vast majority of GRP programme candidates (95 per cent) opting to sink their funds into property rather than choosing the capital transfer or business investment routes the programme offers. Over the past eight years, it is estimated that a phenomenal €5 billion has been contributed to the country’s economy via the GRP scheme.
Regaining perspective and learning lessons from previous market hiccoughs
During these unprecedented times, foresight and a sense of perspective can be thrown into question. Looking back on previous crises and assessing their forecasts compared with actual outcomes provides an informed outlook beyond the current pandemic.
The 2008 global financial crisis did indeed originate from within the property market and caused a major knock to investor confidence. Nevertheless, market experts broadly agree that the current downturn will not hurt the real estate sector in the same manner. Dhruv Arora, CEO of the Singaporean digital wealth management firm Syfe, explains that: “In most historic recessions, the property market has either remained largely resilient or was only impacted across certain real estate sectors.”
Looking at the UK housing market, before the coronavirus pandemic placed the nation on lockdown, the property sector was in a strong position with the three-year high in investor confidence attributed to the “Boris bounce”. Fortunately, a competitive market, strong house prices and high rental demand placed the sector in good standing to cope with the impact of COVID-19. While lenders initially withdrew mortgage products and restricted services, a revival was gradually implemented soon after with more online processes integrated into the buying process.
Investment-for-residency as a long-term investment strategy
Although times of unrest and upheaval can negatively impact house prices, successful investors look to the long-term for returns on their investments. In the bid to rekindle global economies in the wake of the COVID-19 pandemic, governments have drastically cut interest rates. This has, in turn, vastly reduced the cost of borrowing. For individuals with the necessary finances, taking out a mortgage product has just become far more competitive.
Indeed, Dr Steffen believes that foreign property investment and residency programmes will continue to feature as strategic measures against asset volatility and wider upheaval. He notes that: “Real estate-linked investment migration is a long-term proposition that — over and above the obvious benefit of providing a home in an alternative location of your choice — secures access to new markets, educational institutions, secure healthcare systems and a suite of investment and personal opportunities for both present and future generations.”
Rethinking global mobility and investment choices
Dr Parag Khanna, founder of the scenario planning and strategic advisory firm FutureMap, expects the current pandemic will encourage many to rethink their global mobility options. Commenting in the Henley Passport Index Q2 Update, he explains that “The combined effect of the COVID-19 pandemic on public health, the global economy, and social behavior may augur deeper shifts in our human geography and our distribution around the world. As the curtain lifts, people will seek to move from poorly governed and ill-prepared places to more proactive countries with greater resilience and better medical care.”
Dr Steffen concludes that European property investment migration schemes, in particular, continue to be a reliable option during times of unrest. He reassuringly asserts that: “At this time, when markets are being dealt heavy blows, it is vital to remain calm and make strategic long-term decisions. As a tried-and-tested hedge against volatility, securing alternative residence or citizenship through property purchase is one of the safest, smartest, most sustainable investments you can make.”