By Christopher Willis
The residency and citizenship by investment (RCBI) programs resemble Charles Darwin’s theory of evolution. Countries give birth to new programs, and these evolve to thrive or flounder and die. The competitive field of investment migration is very much a case of survival of the fittest.
Take Portugal, for example. Until this year, it was the premier European destination for foreign entrepreneurs. But it’s losing pace with its European Union (EUR) rivals after stripping the real estate option from its golden visa program. This decision has led to a spike in interest in other European countries, mainly Malta and Spain, which offer similar residency-by-investment (RBI) alternatives with a more attractive range of investments.
PORTUGAL, THE KING OF EUROPEAN RBI, SEES ITS CROWN SLIPPING
Portugal was a popular destination for investors thanks to its golden visa programme dating back to 2012. The program awards foreign high-net-worth-individuals (HNWI) a Portuguese residency permit in return for making a qualifying investment in the country.
Yet, in mid-2023, the Portuguese government tightened the terms. Investors can no longer buy property to earn a golden visa; the government closed the door on that route to residency after it was linked to pricing the average Portuguese national out of the real estate market.
These changes have made the Portuguese RBI program less appealing. It remains open for those willing to invest in capital or start a business to create jobs for Portuguese citizens. However, the minimum qualifying investment amount increased from 280,000 euros to 500,000 euros.
THE MALTESE FALCON SOARS
Malta emerges as a leading destination for foreign investment migrants. Its Permanent Residence programme, also known as the MPRP, offers a straightforward path to Maltese residency.
Launched in March 2021, it replaced Malta’s Residence and Visa programme (MRVP) and gave non-EU nationals permanent residency in exchange for a significant investment in the country.
The investment requirements for the MPRP vary. Investors can buy a property worth at least 350,000 euros (300,000 euros if it’s in southern Malta and Gozo) and contribute 68,000 euros to the government. Or they can donate 98,000 euros and take out a 12,000 euros annual lease of a residential property (10,000 euros if it’s in Gozo and southern Malta).
Over 1,000 investors have obtained permanent residency in Malta since the program’s launch. The government has also said the MPRP attracts foreign investment and creates jobs. In 2022 alone, it contributed to the Residency Malta Agency over 50 million euros.
THE SUN CONTINUES TO SHINE ON SPAIN
Spain is another European country that has seen a rise in investment migration. The country issued its first golden visa in 2013, following the classic formula: foreign HNWIs receive a residency permit in exchange for investing in Spain.
This RBI program has drawn particular interest from Chinese and Latin American investors, attractive to those who want a second home or want to establish a business. For every home sold in Spain today, one in five is to a foreigner.
Latin American investors enjoy an even shorter route to citizenship. For them, it takes two years as opposed to the usual 10. Moreover, they only need to take one of the two different citizenship exams; Latin American residents of Spain skip the language-based DELE A2. Yet they must show they know the basics of the Spanish Constitution and popular culture in the CCSE test.
DRIVING FACTORS OF INVESTMENT MIGRATION TO EUROPE
There are many factors driving investment migration to Europe. One of the most common factors is economic opportunity, as HNWIs can access new markets and grow their businesses.
In addition, Europe guarantees a high standard of living with excellent education, healthcare, and infrastructure. This attracts HNWIs looking for a better quality of life for their families.
Access to the European Schengen Area is another motivation and explains why HNWIs invest in Maltese, Portuguese, and Spanish residencies. As EU residents, they can move freely within this zone, important for business and leisure travel purposes.
Also, other trends are shaping the investment migration landscape in Europe. These include increased demand from China due to its ever-developing middle class. Chinese investors can access more disposable income and afford European golden visas.
INVESTORS LOOK TO MALTA AND SPAIN AS PORTUGAL’S POPULARITY RECEDES
The Malta and Spain programmes are not new, but as Portugal’s golden visa dulls, they shine brighter in the eyes of foreign investors. These countries are established tourist hotspots and appealing as more permanent bases. Favorable climates and the chance to go to the beach year-round are pluses, as their strong economies and high living standards.
Both Malta and Spain look to take advantage of Portugal's decision to remove the real estate option as a qualifying investment and benefit from the continued demand for residency in Europe.
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