IM Yearbook 2020/21

In recent years, more and more
mass affluent people developed an
interest in investment migration
as programmes became ever more
affordable. How do you believe the
coronavirus pandemic will change
the industry’s client profile?
The mass affluent – those with investable
assets between US$1 and US$5 million
– have been hit hard by the pandemic.
Many of them generated their wealth
through entrepreneurial activities, and
their businesses are now dealing with
the fallout from the global recession.
These funds would otherwise be
available for investment migration but
have now been re-allocated to shore
up their businesses. For investment
migration programmes this means that
the pool of potential clients for less costly
options is smaller – at least for now.
Once the global economy recovers, we
may see the release of pent-up demand.
How will the coronavirus pandemic
reshape the market from the
supply side? Will we see new
countries entering the industry,
possibly in order to secure revenue
for a post-Covid recovery?
I am certain that we will see more
countries establish programmes of their
own. In terms of citizenship, there are
many rumours about who’s next to join the
industry. Solomon Islands is probably the
most commonly cited case. I don’t think
EU countries will introduce citizenship
programmes given the current negative
stance of the EU towards the sector. At the
same time, we see that many EU countries
are trying to find ways to kickstart
their economies post-Covid. There is a
fuzzy border between the more passive
residency-by-investment programmes
and the more active entrepreneurial
programmes. In the EU, we already have
a big spectrum of programmes that vary
both in terms of the letter of the law and
in terms of the application of the law. I am
predicting that in Europe we will see future
programmes couched in entrepreneurial
terms but with a more passive investment
form. Overall this will lead to a situation
where there will be more programmes
competing for fewer investors.
How will programmes need to respond
to these changing market dynamics?
Rather than dropping their prices,
I believe programmes should raise
them. Let’s look at the Caribbean. The
Caribbean has been hit hard by the
pandemic because tourism has stopped,
which is the only other sizeable source of
income for those countries. This means
the revenue they can get from their
investment migration programmes is ever
more important. Because the Caribbean
programmes are among the cheapest
options available, they have traditionally
seen strong interest from the mass affluent
segment, which, as I’ve already mentioned,
is diminishing. If the Caribbean CIPs now
drop their price point further in an effort
to attract clients, it can just plummet into
nothing. Rather than a race to the bottom,
I think it’s a good time to keep price points
level, if not increasing them a bit in a
coordinated action. People are often more
interested in a product that costs more.
We see that in many other markets, for
instance in the wine market, where the
price changes the way we perceive and
appreciate a wine. I think this is something
that the Caribbean should keep in mind,
especially as Covid-19 has made people
much more concerned to hedge their
risks. Other programmes should also
consider revamping their price points,
especially those that are doing well at the
moment. They can afford to become more
selective in terms of whom they accept.
Looking to the future, how do you
believe the industry will develop
in the coming five to ten years?
When people talk about the investment
migration market, they mostly think
of the Caribbean and the European
programmes, as well as the traditional
immigration countries such as the
UK, US, Canada, Australia and New
Zealand. RBI programmes in the Global
South are often off the radar, but they
are performing exceptionally well. As
a result of Covid-19, it could well be
that places in the Global South with
good healthcare systems become very
attractive in particular for investors from
the region who may now prefer to stay
closer to their homes. We should not
underestimate the effects of the pandemic
in terms of people’s willingness to travel.
Malaysia’s My Second Home is a good
example of investors’ rising preference
for regional options. The programme is
receiving more applications than any of
the European ones and is very popular
with the Chinese. There are programme
options in the UAE, Thailand, Taiwan,
Panama and many others which all might
see an increase in demand, especially
if capital continues to accumulate and
flow within the Global South. Europe
will continue to remain attractive for
Russian and Middle Eastern investors,
while for people from the Americas,
the Caribbean is a more convenient
option. Across the board, I believe we
will see greater regionalisation.
In the EU, we
already have a
big spectrum
of programmes that
vary both in terms of
the letter of the law
and in terms of the
application of the law.
Prof. Kristin Surak, London
BIO School of Economics, is
known for her research
on international migration,
nationalism and political sociology,
which has been translated into
a half-dozen languages. She
has been an invited fellow at
Princeton University, the Institute
for Advanced Study (Princeton)
and Cambridge University. In
addition to publishing in major
academic and intellectual
journals, she also writes regularly
for popular outlets, including
the London Review of Books, New
Statesman and Washington Post,
and comments for international
news agencies including the BBC,
Deutsche Welle and Channel News
Asia TV. Her book Citizenship 4
Sale: Millionaires, Microstates,
and Mobility will be published by
Harvard University Press in 2021.
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