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Domicile Diversification via Investment Migration: Essential in a Volatile World

Dominic Volek

Dominic Volek is a member of the Executive Committee and Group Head of Private Clients at Henley & Partners.

Volatility has catapulted ahead to join change as a global constant in the short time since the 2020s commenced. Whether owing to the relentless Covid‑19 pandemic and its numerous variants, political and social upheaval, supply chain interruptions, or successive climate disasters, one thing seems undeniable — tomorrow could well bring yet another iteration of the world we thought we knew.

Inevitably, volatility is accompanied by uncertainty. What once felt secure now seems precarious. Previous givens are punctuated with question marks. The continued barrage of factors eroding our prized stability is also enhancing the appeal of investment migration programs. After steadily gaining in popularity over the past two decades, interest in alternative residence and citizenship is continuing its upward trajectory.

Domicile diversification for residence optionality

In the past, one of the primary reasons high‑net‑worth investors sought alternative residence and citizenship options was to enhance their global mobility by investing in a country with a stronger passport that would enable them to travel more freely. With international travel still inhibited, the change in dynamics we are witnessing is indicative of interesting new ‘push’ and ‘pull’ factors. Talented and affluent investors and their families need not limit their lives and business operations to one country or jurisdiction alone. This realization is seeing growing numbers of high-net-worth investors across the globe diversifying their domicile options through investing in one or more residence or citizenship by investment program, according to their families’ unique requirements.

Having the option to change residence to a country with more opportunities is an increasingly important aspect of international planning for private clients, and there is a wide range of attractive programs in some of the world’s most sought-after places in terms of business environment, quality of life, and access to top tier tertiary education institutions and private hospitals. If the residence by investment path is chosen, many programs include the possibility of acquiring citizenship after a stipulated period of legal residence.

A spike in demand led by government efficiency, healthcare, and tax optimization

In the pandemic world, efficient governance and access to first‑rate healthcare have become important drawcards for our clientele. This shift was predicted by FutureMap founder Dr. Parag Khanna, who wrote that as the coronavirus curtain lifted, people would seek to move from poorly governed and ill‑prepared places to more proactive countries with greater resilience and better medical care. The pandemic has also proven that we can work remotely with success, enabling even more options. Despite ongoing travel restrictions, many people have moved, and many others are doing their research and preparing their families for fresh starts in new countries.

Covid‑19 has accelerated a pre‑existing trend. Even before the pandemic was declared, reports emerged from developed countries such as the UK and the USA of people leaving cities in search of a quieter life. While cities are bouncing back, the current crisis has seen the same desire for new beginnings in peaceful places playing out on an international scale, with investors actively seeking out relocation options so that, once global mobility has been reinstated to some semblance of what it previously was, they and their families can live in more spacious, far‑flung locations that offer a better quality of life and cleaner air.

Last year saw yet another new driver come to the fore, namely the global minimum tax on corporations driven by the Biden administration in the USA and backed by all G20 countries. Interestingly, six of the top 10 countries in terms of enquiries received in 2021 are G20 members. We saw an astonishing 208% spike in enquiries from US citizens in 2020, with further growth of 26% in 2021. We also received 47% more enquiries from Canadian citizens and 31% more from UK citizens in 2020 compared to 2019, with remarkable further increases of 86% and 110%, respectively, in 2021. All three countries have had wealth taxes on the cards for some time.

Investment migration options now a ‘must‑have’

The investment migration industry has been growing steadily for more than two decades. Astute investors now recognize that by extending their wealth planning and legacy management strategies to include investment migration, they can catalyze the transition to new lives in countries of their choice that host investment migration programs. In these countries, they can feel more comfortable and secure, and can envisage a future that is better aligned with their aspirations, not just for now but for generations to come.

Multi‑directional market expansion

Investment migration has also captured the attention of several new wealth markets in recent times. Over the past two years, there has been a notable increase in the number of enquiries from citizens of developing economies in the global south. In times of such uncertainty, the global demand for dual citizenship and investment migration is increasing, as expected, and we predict that these markets will grow even further, particularly considering that emerging economies are expected to soon regain momentum after the setback of 2020 and see faster wealth growth than in developed markets between now and 2025.

The growing appeal of multiple alternatives

Through investment migration, affluent investors can overcome the limitation of being restricted to a single jurisdiction. For ultra‑high‑net‑worth investors, a single alternative residence or citizenship will always create value, but strategic yield can be created only through strategic advisory and a portfolio investment approach to investment migration. To cover all eventualities, an integrated portfolio of complementary investment migration options will create optimal value by permitting ultra‑high‑net‑worth individuals and their families to live, work, and invest in a suite of locations worldwide, thereby hedging manifold levels of volatility and creating enhanced‑yield.

Program inflows – alternative revenue streams in times of crisis

When catastrophes such as pandemics strike, and in the wake of other climate emergencies and natural disasters that occur with greater frequency each year, the countries that host investment migration programs can rely on program inflows to recover their economies, build capacity, reduce debt, and make capital investments. Residence and citizenship by investment programs are designed by sovereign states as an alternative, debt-free, capital‑raising platform to diversify their economies, thereby creating societal and sovereign value, or ‘sovereign equity’. Just as ultra‑high‑net‑worth demand for residence and citizenship by investment programs has been growing in recent years, so has supply. More than 100 countries have investment migration legislation in place, and there are over 60 active programs globally, of which about 40 are relevant and successful.

Investment migration programs are invaluable to both investors and sovereign states

As more governments set up investment migration programs, and those with programs introduce more options to mitigate the destruction caused by the coronavirus, residence and citizenship by investment programs will continue to be invaluable both to investors intending to futureproof their families and change the trajectories of their legacies, as well as to sovereign states in desperate need of alternative revenue streams. Participating in any investment migration program is therefore not only an investment in the future of one’s family; it is also a sustainable investment, as host nations depend on residence and citizenship by investment program inflows to support progress.

Investment migration will act as a hedge against significant macro-economic volatility that persists, creating even more sovereign and societal value across the world. The industry continues to boom, and there is an ever‑increasing range of competitive and desirable options, particularly for investors looking to start afresh and relocate their families to safer shores.

Dominic Volek is Group Head of Private Clients at Henley & Partners and a member of the Executive Committee. Originally from South Africa, he now spends his time between London, Dubai, and Singapore as a private client specialist in residence and citizenship planning and provides advice to ultra‑high‑net‑worth individuals and their families across the globe. His work targets countries that are deemed most attractive to wealthy individuals in terms of mobility, security, privacy, personal tax, estate planning, and lifestyle. He is also a member of the firm’s Government Advisory practice, providing strategic advice to governments on the design, implementation, and promotion of successful investment migration programs.

Dominic is a member of the Investment Migration Council and a certified Chartered Accountant CA (SA), holding both a Bachelor of Commerce in Accounting with Honors and a Bachelor of Arts in Corporate Communication. Prior to joining Henley & Partners, he had a successful career as part of the senior management team in one of the big four accounting and advisory firms in Singapore, South Africa, and the USA. He is frequently sought as a speaker and a thought leader on residence and citizenship planning, and he regularly provides commentary on the Henley Passport Index that is published in the Henley Global Mobility Reports. He has been interviewed by media such as the BBC, Bloomberg, and Quartz.

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