It has been widely reported that the Chinese are keen global investors, and the worldwide market for attracting this investment is competitive. The US has been particularly successful in attracting Chinese investment and recently announced that the EB-5 programme – which grants visas to those who invest $500,000 in the US – has already reached its quota of 10,000, of which 85% were Chinese applicants. As a result, it may take between 3-5 years for new applicants to be successful. Canada has already closed its equivalent investment programme following a period of great success. So where will the Chinese invest instead?
We have seen an interesting shift in the UK over the last few years. Previously, the top investors – in terms of the numbers applying under the UK’s Tier 1 Investor visa programme – were the Russians, closely followed by the Chinese, and with Americans being a distant and surprising third. More recently, Chinese investors have overtaken the Russians. The UK Investor programme allows the investor and their dependant family to reside and work in the UK. On investment of £ 1million they are eligible for permanent residency after five years; if they invest £5million they become eligible for permanent residency after three years and on investment of £10million they will obtain permanent residency after two years. It has been mooted that the minimum investment of £1million will be raised, but this has yet to be formally announced by the government.
The Home Secretary, Theresa May, has played a key role in attracting Chinese visitors to the UK (albeit belatedly). She is acutely aware that as a nation, the Chinese spend the most when they travel and contribute a welcome boost to the retail economy. Chinese visitors have historically opted for the quicker and easier Schengen visa which has led to France and Italy, amongst others in Europe, benefitting from Chinese consumerism, leaving the UK out of favour. The introduction of a fast track Visit visa process and an option to combine this application with a Schengen visa helped make the UK more attractive to Chinese tourists. Their experience as tourists will clearly impact upon any decision to invest in the UK.
A similar story can be seen in Portugal where 81% of applicants under their Golden Visa programme have been Chinese. This programme gives a Schengen visa to successful applicants who, for the most part, buy Portuguese real estate worth at least Euros 500,000. After five years they are eligible for permanent residency. Greek property developers are reporting a similar level of interest from the Chinese.
Caribbean countries are also very active in this market. St Kitts & Nevis has the oldest citizenship programme in the world whereas Antigua has only recently launched a programme to attract inward investment. These programmes differ from the above-mentioned as they are citizenship programmes, so in exchange for a donation such as a $250,000 investment to the St Kitt’s Sugar Fund an applicant will obtain a passport rather than a visa. However, the benefits are different. The Caribbean applicant will only be able to travel to visit the UK and Europe visa free, without the potential to obtain any EU permanent residency.
The latest to have attracted attention is the Malta ‘citizenship by investment’ programme. The requirements are as follows:
1. A donation of Euros 650,000 to the Maltese Government;
2. An investment of Euros 150,000 Maltese Government bonds for five years;
3. Property in Malta worth at least Euros 350,000 or a lease for five years’ worth at least Euros 16,000 each year;
4. Global health insurance worth Euros 50,000 per person; and
5. Demonstrable links to Malta.
In exchange for the above, an applicant can obtain a Maltese passport in approximately 12 months. This means that the Maltese applicant and their dependant family members have complete freedom of movement throughout Europe and can live and work anywhere in Europe including the UK. Around 200 applications have been received by the Maltese government to date and there is a cap of 1,800 so there is a likelihood that this programme will also become oversubscribed. Although many of our clients see a second passport as the ultimate prize, this may not be so attractive to a Chinese applicant, as the People’s Republic of China does not recognise dual nationality and therefore they would need to give up their Chinese passport in order to acquire an alternative citizenship.
The market is vast and varied but the UK has unique benefits to offer. At Mishcon de Reya, we recently undertook a study of our UK Investors who confirmed that the rule of law, security of assets and the education system for their children were the prime reasons that they chose the UK over other jurisdictions. It has been reported that the Chinese have favoured English speaking countries to send their children to school. It is our view that the UK has the most to offer Chinese investors now that the US and Canada have closed their equivalent Investor programmes and we will watch the statistics with interest.