REITs: An Irish Immigration Investment That Puts Control Back in the Investor’s Hands
Ireland continues to grow in popularity as a destination for immigration investment for non-EEA nationals through their well-structured Immigrant Investor Programme (IIP).
The popularity of the Irish programme has a lot to do with “Ireland-specific” factors: Ireland is an English-speaking, European Union nation providing investors not only with access to EU markets and opportunities but also world-class education and schooling for their children. The overarching benefit however would be the comparative flexibility and accessibility of the Irish program compared to options provided by many other countries.
Successful IIP investors will hold “Stamp 4” status: a high-level residency permit reckonable for applications for full citizenship. Stamp 4 status holders do not need to physically reside in Ireland.
Although the IIP provides four options for investors to choose from – Endowment, Investment Fund, Enterprise Investment, and REITs – the Enterprise Investment option has been by far the most popular since the IIP was established in 2012. According to figures released by the Department of Justice, this investment option represents over 80% of IIP applications up to 2018.
Investing in REITs: A better option for some
The REIT was introduced as an IIP option in 2015 but this has been the preferred route in less than 1% of applications per year.
Here, we look at what a REIT is, why it has been less popular than the other investment routes, and why it can be a superior option for some investors.
What is a REIT?
A Real Estate Investment Trust (REIT) is a company that directly invests in income-producing real estate, either owning or managing the properties themselves. It is a popular, tax-efficient structure that allows investors to invest in a portfolio of large-scale real estate rather than limiting investment to individual properties. REITs typically offer strong dividend yield and because their shares are traded on public exchanges, this is a flexible, liquid method of investing in real estate.
There are currently three Irish REITs – Hibernia, I-RES, and Yew Grove – which all trade on both the London Stock Exchange and the main Irish stock exchange, Euronext Dublin.
Webinar: Unlock Ireland is hosting an IIP/REIT webinar on Feb 23rd. Click here to register.
Low take-up to date (<1% of applications)
The main reason for the low level of applications of investors choosing the REIT investment route is a general lack of awareness of the benefits of Irish REITs as an immigration investment option – the flexibility and potential dividend yield is generally not heavily promoted or understood. Another reason is the higher minimum investment requirement of €2 million, which is the highest investment amount of the four available options:
Minimum Investment Required:
- Endowment €500,000 Euro
- Investment Fund €1 million Euro
- Enterprise Investment €1 million Euro
- REIT €2 million Euro
It is clear, however, that there can be significant advantages in choosing the REIT option for some investors. Here are some of the advantages:
Diversification
For experienced investors with an existing share portfolio, Irish REITs allow investors to invest into EU real estate and Euro currency stocks that provide regular dividend income.
The three Irish REITs each have a different focus; one concentrates on high-quality commercial property in Dublin, one focuses on Ireland’s largest residential landlord and one owns office and industrial holdings outside of Dublin’s CBD for multinational companies and government bodies. Investors can choose what proportion of their funds they wish to invest in each REIT or they can elect to invest in just one.
See here why Multinational Companies Invest in Ireland
Return
Irish REITs are required to distribute 85% of rental profits to shareholders each year, and the average dividend yield is currently circa 5% per year across the three REITs.
In addition, REIT investors can achieve capital appreciation over the course of their investment in accordance with any increases in the share price.
Control
For some individuals exploring immigration investment in Ireland, there can be the perceived loss of control with certain options. Making a €1 million investment into an Irish social housing or nursing home development project through an unfamiliar company in a different jurisdiction can appear to be a leap of faith for some investors, irrespective of the security provided.
REIT investors can, and should, conduct their own research and due diligence on these publicly listed companies, take professional advice from their own wealth advisors, and then choose to invest across any of the three REITs in whatever proportion they see fit.
In addition, REIT investors can monitor share price performance on a daily basis, receive analyst research reports, review the REITs annual and interim results, and as a shareholder even personally attend the company’s Annual General Meeting.
Investors in REITs retain full control over their investment, hold the shares personally and can dispose of them at any time.
Liquidity
All shares in Irish REITs are traded daily on the main Irish and London stock exchanges so an investor has the ability to dispose of their shares at any point. However, please note that to maintain eligibility for Ireland’s IIP and to continue to enjoy the benefits of an Irish residency visa, investors are required to maintain their full €2million investment for the first 3 years at a minimum.
Hassle-free
The application process for investing in the REIT option is by far the most straightforward – investors need only indicate on their application that a REIT investment is their preferred option and that they have the required funding. For the other three IIP options, a detailed business plan or a much greater level of detail on the investment structure is required, resulting in a more onerous application process.
Each of the four investment options has its own advantages and each potential IIP applicant will have his or her own unique circumstances and needs. Immigration Investment through the REIT option can be suitable for the more financially astute, “professional investor” with an established share portfolio.
Unlock Ireland is an independent consultancy providing a full immigration advisory service. We enable investment in all four IIP investment options, and provide independent advice to help the investor make the right choice.
If you want to find out more about Ireland’s IIP and the Irish REIT investment opportunity, please contact us today for further information. Email: info@unlockireland.com
The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Investing involves risks. We advise you to only invest in financial products that match your knowledge and experience.
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