Forget NFTs, wines and whiskies. Today, more and more high-net-worth families and investors are tapping on residency programmes like those offered by Henley & Partners to protect and grow their wealth. Managing director of Henley & Partners Nirbhay Handa tells us more.
Why is residency becoming an increasingly sought-after luxury by the HNWI?
Alternative residence (or dual citizenship) is less of a status symbol than it is a legitimate wealth management tool. Globally, HNW families and investors are seeing the benefits of investment migration not only to improve their mobility or for lifestyle and education purposes but also as an avenue to take their businesses global, protect their families’ future and have an insurance policy in place to hedge their sovereign risk.
In the world of investments, one of the best practices is to invest in different regions and asset classes, from equities to real estate, to spread the risk and find the greatest value. But what about where you live? The same principle applies. The more jurisdictions you can access, the more diversified your assets and opportunities, and the lower your exposure to country-specific risks such as poor health security, higher tax burden, or unexpected policy changes.
The ultra rich plan an entire generation in advance to ensure their wealth can continue to grow and prosper their children, grandchildren, or even great-grandchildren. We see this in our clients who are always keen on citizenship programs that their offspring can inherit.
In an unpredictable world, geographically diversifying your domicile can help secure access to top quality education and healthcare while reducing exposure to risks such as crime, political instability, or poor governance.
What are the most common reasons cited for your clients when looking to tap on your services?
Wealthy individuals are more cosmopolitan and transnational than ever before. Global connectivity has become an indispensable feature of wealth creation and wealth preservation, and its value will only grow as regional volatility and instability increase.
For someone looking to expand their business globally, an alternative citizenship or residence could secure access to a new market and pave the way through various hurdles such as the right to work and operate a business, visa requirements, as well as resident rights including access to healthcare and education.
What are the global trends you’ve noticed?
In our line of work, any type of uncertainty, be it political, economic or security, usually propels interest in our services. We’ve seen this with the unrest in Hong Kong, Brexit, Covid-19 and more recently Capitol Hill in the US. Interestingly, in the last 12 months, the US has become our single biggest market as clients realised that putting all their eggs in one basket from a citizenship or residence perspective wasn’t ideal. This has also extended now to US expats in international hubs like Singapore and Dubai.
Another emerging trend we see is that countries are competing for HNWIs as they not only bring their wealth but also talent, years of entrepreneurial experience and most times their businesses along with them. Countries which are politically neutral, financially and politically stable with robust infrastructure to provide opportunities for wealth preservation are likely to attract these HNW families. The historic success of Switzerland and relatively recent success of Singapore are demonstrations of that.
According to Dr. Parag Khanna, Founder and Managing Partner of FutureMap, the second half of the year may well see millions of people scattering again. “Countries facing fiscal pressures and skilled labor and investment shortages will seek to attract and recruit everyone from start-up entrepreneurs who can stimulate innovation to doctors and nurses who can boost public health services. The global war for talent is now well underway.”
“In our line of work, any type of uncertainty, be it political, economic or security, usually propels interest in our services. We’ve seen this with the unrest in Hong Kong, Brexit, Covid-19 and more recently Capitol Hill in the US.”
Nirbhay Handa explains why the rise of global instability has resulted in increased interest in residency programmes
How attractive is Singapore to your global clients?
The Henley Passport Index consistently ranks Singapore’s passport as the top two most powerful in the world. As a result, Singapore citizenship is one of the most sought-after in the world, and we receive a lot of inbound interest for families looking to establish a residence in Singapore.
Many HNW families across Asia rely on Singapore’s financial services infrastructure for their wealth preservation needs. However, the bar for Singapore’s Global Investor Program (GIP) is very high. The GIP is specifically for entrepreneurs or investors interested in making substantial financial investments in Singapore and attracts wealthy foreigners who wish to make Singapore their home. The GIP program is available for eligible investors or entrepreneurs with at least three years’ track record and with a company that has an annual turnover of SGD200 million in the most recent year and at least SGD200 million per annum on average for the last three years.
In March 2020, the GIP expanded the criteria for eligibility. Now, next-gen business owners, founders of fast-growing companies and family office principals with net investable assets of at least SGD200 million are eligible.
However, it isn’t the easiest program to apply for. The GIP favours businesses in growing industries such as Fintech, bioscience, and health tech with applications needing to be endorsed by the Economic Development Board.
So, it only makes sense for those who have a very strong entrepreneurial record in those aforementioned industries, and families who are really willing to make a commitment to grow and establish their businesses in Singapore and across Asia.
There’s an argument that shuttling wealth around to tax havens doesn’t do the world any good, as the money is hoarded instead of being used to develop society. What are your thoughts on this?
People often misunderstand the investment migration industry. Some might think it’s about tax management, but that’s not the primary reason. Even amongst our clients, tax planning might be a motivator that drives initial enquiries, but that’s because they themselves don’t know or understand. While investment migration can form part of tax planning, the applicant must physically move and register as a tax resident elsewhere, but a lot of applicants don’t move.
Singapore’s GIP attracts investors who genuinely want to move and raise families here. This is in contrast to most other investment migration programmes, which have little to no physical residence requirements. Singapore wants investors to come not just to invest, but to consume, pay taxes, and hire locals.