Launched in 2012 in six of the 28-nation European Union (EU) countries, as well as several other locations such as Turkey and Latvia, Citizen by Investment Programmes (CIP) have become increasingly popular over the last few years, attracting a swathe of Middle Eastern investors.
CIPs have enabled EU and non-EU nationals to make a real estate investment of
€500,000 (AED2.1 million) or more, or invest into a commercial entity or business,
to apply for a residency visa, and potentially gain citizenship.
Portugal and Cyprus are two destinations that have seen a surge of interest in recent years from a cross-section of the global real estate investment community looking at potential residential real estate opportunities. The lure of a substantial investment opportunity and the bonus of access to residency and citizenship programmes are proving attractive for many investors who are considering where best to place their hard-earned capital overseas, while in turn also adding a further layer of security by diversifying their investment portfolio.
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Real estate commentators and analysists have long lauded the Portuguese real estate market. The latest research from real estate consultancy Knight Frank cited impressive growth for the country’s capital, with property prices in Lisbon increasing 24% compared to 2012, in the wake of the financial crisis.
With a resilient market, good returns on investment (ROI), relatively low cost per square metre when compared to other European capital cities, and a stable environment
combined with simple qualifying criteria and the highly reduced minimum stay requirement – an average of just seven days per year - Portugal continues to be one of the most attractive investment locations.
The Portuguese ‘Golden Visa’ applies to the investor and dependent family members with just one investment. They can also travel visa-free throughout the entire Schengen area,
as well as benefit from no direct tax obligations or implications for income generated outside of the country.
Meanwhile, Cyprus offers one of the quickest (completion in approximately six to eight months) and most assured routes to European citizenship through its CIP, the Cyprus Investment Programme. An investment of €2 million (AED10.3 million) in real estate is required. In May this year, the Cypriot government amended existing rules to include the addition of two government contributions of €75,000 (AED307,000).
The Cyprus Investment Programme grants investors a Cypriot passport and EU citizenship, allowing the freedom to work, travel, study and live in all EU member states and, similarly to Portugal, this includes the whole family with the bonus that it passes from generation to generation.
The economy in Cyprus has faced many problems in recent years, however, after eight years of house price decreases, the Central Bank of Cyprus announced in December 2018 that the nationwide residential property price index rose by 1.82 per cent, the most significant annual increase since Q4 2008. Underscoring the stabilisation of the economy was GDP growth in 2018 to 3.8 per cent, and unemployment levels fell to 7 per cent – a positive indication of the return of confidence in the real estate market.
Looking at Turkey, the country has placed increased emphasis on its CIP in a bid to boost investment in the economy as well as the value of the lira, which fell 40 per cent in 2018 due to government monetary policy and sanctions and trade curbs imposed by the United States. In order to stimulate growth, new regulations have cut the value of property required to be owned for three years from US$1 million (AED3.67 million) to just US$250,000 (AED918,200) denoting a huge 75 per cent decrease. Reports claim this could double annual foreign property investment to US$10 billion (AED36.7 billion).
The country is already proving popular with investors from Iraq, Saudi Arabia, Kuwait and Russia due to more favourable prices compared to neighbouring countries resulting in excellent long-term ROI opportunities. There is also a myriad of options available due to the comparatively untapped nature of the housing market in the country, meaning the dream home for many investors is very attainable.
Back in 2014, Malta came under fire for offering a passport for just €650,000 (AED2.6 million) – without actually having to live there. The rules have changed somewhat in the last five years, and now foreign investors must purchase a property for €350,000 (AED1.4 million) which is held for five years, plus a contribution of €650,000 and various other additional requirements, depending on the number and age of family members.
In return, according to residence and citizenship advisory Henley & Partners, foreign investors to Malta will have access to citizenship in a politically stable EU member state, the world’s strictest due diligence standards and vetting of applications, visa-free travel to 182 destinations and a country strategically located with excellent air links.
It’s not only European countries offering a multitude of CIP opportunities. One of the pioneers of the initiative, the Caribbean, has long been a popular destination for investors looking to combine a luxury property with citizenship. The once-maligned reputation of investing in real estate in the Caribbean has been negated by positive returns in locations such as St Barts and Mustique, according to Knight Frank.
Countries such as Antigua & Barbuda, Dominica, Grenada, St Kitts and St Lucia are proving popular with those looking for a second passport. For as little as US$400,000 (AED1.5 million) investors can enjoy visa-free travel to over 100 – 140 countries worldwide, including access to the EU Schengen zone and the UK, as well as an enviable, slower pace of life – a must-have for seasoned property investors from around the world.
