Three Things You Should Expect From Investment Migration in 2024

Reasonable Doubt
With David Lesperance

A contrarian expert on contingency plans for the wealthy delivers uncomfortable truths.

In keeping with my tradition of climbing out on the prediction limb, it is time again to make some educated guesses about the residence and citizenship by investment (RCBI) world in 2024. First, it is worth revisiting my 2023 predictions to see how well I did. 

2023 Prediction 1: The end of the Zero Covid Policy in China will have a dramatic impact both on Chinese emigration and global travel restrictions

After the Covid lockdown, many Chinese decided it was the year to leave, given the increasing government control and the declining economy. This was especially true for high-net-worth individuals (HNWI) and ultra-high-net-worth individuals (UHNWI).

Unfortunately, many mass affluent Chinese had much of their wealth tied up in rapidly declining illiquid Chinese real estate, which limited their ability to fund a move abroad.

In contrast, HNWI and UHNWI businesspeople were more likely to already have substantial funds outside China and would still have some opportunities to get money out through their business activities.

As for a new pandemic wave of “walking pneumonia,” there are already news reports about overwhelmed Chinese hospitals. This overload will soon become a calamity as we are but weeks away from the annual super spreader event known as Chinese New Year.

Whether travel restrictions in China or other countries return depends on the transmissibility of the bug, its severity and lethality, and the public health responses, which are likely to be guided by politics rather than science.

2023 Prediction 2: The EU will lose its case against Malta’s MEIN, but Malta will close the program anyway

My prediction of the demise of Malta’s MEIN has not come to pass. However, this may be because the case has not yet been adjudicated, or it may be that domestic support is still holding up. It’s one to watch in 2024.

2023 Prediction 3: The other Caribbean CIPs will adapt their programs to be competitive with the recent changes in St. Kitts & Nevis

My prediction that the Caribbean CBI offerings would adapt their programs came true – but not because they were matching St. Kitts & Nevis’ unilateral price hike. Instead, they put new procedures in place in response to the UK, EU, and US concerns about due diligence.

2023 Prediction 4: Grenada will lose market share as a result of the new US law restricting E2 Visa eligibility

As for my prediction regarding Grenada, I will leave it up to others to comment once the backlog is worked through and the application numbers for 2023 are known.

2023 Prediction 5: US securities regulators will focus on investment migration promoters who offer unregistered securities to Americans

My prediction about the SEC focusing on RCBI products, such as the Portuguese Golden Visa funds, has not come to pass. Maybe the SEC was more focused on crypto in 2023, with numerous high-profile charges and convictions in that sector in the past year. 

In 2024, the SEC will again have the bandwidth to look at RCBI securities. In Portugal, with the real estate option no longer available, private equity funds are the only game in town. However, the funds no longer have the cloak of real estate obscuring their US securities law noncompliance.

Therefore, I advise fund managers to recognize that SEC attention was delayed but not eliminated. They should use this unexpected grace period to make sure their funds are US-compliant for the day the SEC inevitably knocks on their doors.

2023 Prediction 6: The Satoshi Island and El Salvador offerings will turn out to be busts and the IRS will audit all Puerto Rico Act 60 residents for physical presence compliance

Having lost over 94% of its value in 2023, Satoshi Island is clearly a rug pull. It has experienced a bit of a “dead cat bounce” through some recent online promises that the years-overdue first modules will arrive. However, even if this promise turns out to be true, Satoshi Island is not “going to the moon.”

Late in 2023, El Salvador announced its initial foray into the CBI market. It was not clear from the details whether the offering was residence or citizenship. Industry professionals universally characterized the $1 million price tag as wildly out of synch with the market.

I think El Salvador will soon find there is a difference between an inquiry and a sale and that their dreams of selling 1,000 slots by the end of the year will go unfulfilled.

American crypto enthusiasts who thought they would follow the prior wave of US fund managers who took advantage of the significant US tax advantages of Puerto Rico are discovering that the island is crawling with IRS investigators. Properly frightened are those who thought they could skirt the strict physical presence requirements of Act 60.

Now, onto my 2024 predictions:

2024 Prediction 1: RCBI demand will rise sharply in the US, UK, South Africa, Israel, India, and Taiwan

This will result from a combination of election-year volatility, wars (or threats thereof), new pandemic risks, tax-the-rich populism, and increased public violence.

Prediction 2: The US, UK, and EU will continue to pressure RCBI programs to close or impose stricter conditions

The US, UK, and EU are in election mode. Many candidates in many countries are raising the specter of unrestricted migration. Most “border protection advocates” do not differentiate between huddled mass migrants and wealthier RCBI applicants.

Though I have argued that the perceived “threat” from investor migrants is overblown and unfounded, opposing such programs is red meat to voters in an election year.

Prediction 3: New countries will resort to investment migration programs to boost FDI and consumption

Many smaller countries are looking to fill budget holes (e.g., El Salvador), increase foreign direct investment (e.g., Hong Kong), or attract high-spending residents (e.g., Bali). Whether these countries bring a program to market depends on whether the desire for these benefits outweighs the possible negative ramifications discussed in Prediction 2.

In fact, 2024 has already seen a new entrant in the market: Saudi Arabia’s Premium Residency Program.