There are a number of countries that offer a path to permanent residency through investment, and options such as Portugal and Greece have been marketed extensively in South Africa. A lessor known option is the EB-5 Visa for permanent residency in the United States.
Many South Africans will know about – and even be entered into – the green card lottery, in which 50 000 green cards are assigned to foreigners every year. The odds of winning the lottery are obviously very slight given massive demand from all over the world. However, it’s also possible to secure a green card for yourself, and your family, by investing in job-creating projects in America, through the EB-5 visa programme.
The cost of this is relatively inexpensive compared with many of the European citizenship by investment programmes, and there are a number of advantages with the EB-5 program for South Africans.
“America is an easy fit, in terms of language, culture and lifestyle,” says Marc J. Sharpe, of LCR Capital Partners, a private equity firm that works with South African investors to secure their U.S. EB-5 visa. “In particular, it’s a popular option for families, where parents are looking for better educational opportunities for their children, especially at university level.”
Although demand from South Africa has increased significantly in the last three years, the U.S. programme still isn’t as widely known in South Africa as many of the European options.
“Many European programmes are (wrongly) perceived as less risky in South Africa because in most cases you are required to invest directly in property. In other words, you buy and own a property in the country you’re seeking to gain citizenship in. This gives investors a (false) sense of security. While investors are buying a physical asset, and buying a property is probably something they’ve done before, what investors aren’t always aware of is that the property markets in these countries are a lot more volatile than what they’re used to in South Africa. The Greek property market, for example, is down 45% since 2008.
“On top of this, there are ever-increasing property taxes levied. In 2015, over 45 000 Greeks refused to accept the properties they inherited. We believe many South Africans would prefer an option to lend into the US real estate market rather than invest equity in other countries.”
“The EB-5 programme is relatively straight forward and we believe it can be a lower-risk option than European programmes. You invest $500,000, which should be returned to you after approximately 5 years, assuming you invest in a high-quality project. You are then free to do what you like with your money, without the worry of having to sell a property, or pay property taxes.”
“With LCR’s current EB-5 project, we’re offering a real estate investment in the Surf Club Four Seasons that is much more secure from both a development standpoint and capital stack perspective than investing directly in a foreign real estate market.”
Below is a summary comparison of some of the world’s most popular investment visa destinations:
United States of America
The EB-5 Immigrant Investor Visa has been available since the 1990s, yet it is still one of the lessor known investment visa options amongst South Africans. A single investment of $500,000 into a new business or property development that creates 10 or more American jobs, investors can secure a conditional green card for the investor, their spouse and all unmarried children under 21 years of age (this process usually takes 12-18 months). Two years after being granted the conditional green card, you can apply for permanent residency, and five years after becoming a permanent resident, you can apply for citizenship.
Investment cost: $500 000 (R6,740,000)
Any drawbacks? Obtaining permanent residency depends on whether your investment has created 10 or more American jobs. Choosing the right investment is key.
If you have at least £2 million to invest, you can apply for the UK’s Tier 1 investor programme. You can either invest £2 million for five years, £5 million for three years or £10 million for two years. You have to invest 75% of the amount into the UK through share or loan capital into active UK companies or Government bonds. The other 25% can be invested into real estate or deposited into a UK bank account. You can apply for the Tier 1 programme three months before you travel. You can stay in the UK with a Tier 1 investor visa for a maximum of three years and four months, but you can extend it for another two years. You can settle permanently in the UK if you have created 10 jobs or generated a turnover of £5 million over this period.
Investment cost: £2 million (R34,900,000)
Any drawbacks? The minimum investment amount places this option out of reach for many South Africans.
Investors can obtain residency through Portugal’s ‘Golden Residency Program’. You have to invest at least €500 000 in real estate or €350 000 in real estate that is older than 30 years or in a redevelopment zone. If you don’t want to expose yourself to a property investment, you can invest €1 million in stocks and shares, in a Portuguese company or bank.
The program was launched in 2012 and offers visa free access to all Schengen countries. It allows investors and their families to live, work and study in Portugal, although they don’t have to live there. The minimum stay requirement is 7 days in the first year of having the visa, and 14 days in each subsequent 2-year period. The initial permit is valid for one year. It can then be renewed for two years, and again for a further two years. After five years, you can apply for permanent residency, and a year after that is granted you can apply for citizenship.
Investment cost: €350 000 – €500 000 (R5,385,000 – R7,695,000)
Any drawbacks? Your investment is exposed to potentially risky real estate and you have to pass a Portugese proficiency test if you’re planning to apply for citizenship.
Spain also offers a ‘Golden Residency Programme’. It was launched a year after Portugal’s programme in 2013 and there are many similarities.
The minimum investment is €500 000 into real estate, which may be spread across a number of properties. You also get visa-free access to all Schengen countries and you only need to travel to Spain once in the first two years and once more in the next three years. There is no minimum stay requirement to retain your residency visa, but if you want to gain permanent residency – and later citizenship – you need to live in Spain.
Investment cost: €500 000 (R7,695,000)
Any drawbacks? You can only apply for citizenship after living in Spain for 10 years, and dual citizenship is not possible, so you would have to give up your South African citizenship.
Greece offers a cheap option for EU residency. Investors can purchase real estate anywhere in Greece, provided the minimum value invested is €250 000. You can apply to bring your spouse, dependent children (up to the age of 21), and even your parents to live with you. You can expect to get your temporary residency card within 1-2 months and this allows you to travel to all Schengen countries.
You’ll need to visit Greece once during the application process. You can potentially obtain citizenship after seven years, provided you stay in the country for that length of time, have no criminal record and a good knowledge of the Greek language, political system and culture.
Investment cost: €250 000 (R3,850,000)
Any drawbacks? Greece is still struggling through its debt crisis, and there have been questions raised about how long it will remain in the EU. So while the minimum investment amount is attractive, investing in property here comes with significant risk.
There are two options in Malta:
The Malta Residency and Visa Programme requires you to provide proof that you earn at least €100 000 or that you have at least €500 000 to invest. There are several other criteria to meet:
- A non-refundable contribution of €30 000
- An investment of €250 000 into government bonds for a minimum of five years
- A property purchase valued at €350 000, kept for at least five years, or a property lease at an annual rate of at least €16,000 for five years.
The second option in Malta is the Individual Investor Programme. It allows you obtain citizenship after one year without visiting the country or doing any language tests – but you’ll need to make a €650 000 contribution to Malta’s National Development Fund (NDF), with an additional €25 000 for your spouse and each child under the age of 18. There’s also a prescribed investment of €150 000 which is held for five years and you have to buy a residential property for a minimum of €350 000, or lease one for at least €16 000 a year for five years.
Investment cost: €630 000+ (R9,700,00+)
Any drawbacks? Unlike many other programmes, Malta requires non-refundable government contributions in addition to meeting investment criteria.
To obtain permanent residency in Cyprus you’ll need to buy a property valued at at least €300,000. You don’t have to stay on the island or do any language tests, and the application process takes around three months. It covers your family (children up to age 25, spouse and parents) and you can travel to all Schengen countries once you’ve obtained residency. It’s also possible to become a citizen, but this requires a much bigger investment (around €2 million).
Investment cost: €300,000 for residency (R4,620,000); €2 million for citizenship (R30,800,000)
Any drawbacks? Your investment is exposed to potentially risky real estate and the investment amount required for obtaining citizenship is prohibitive.
|Country||Minimum investment for residency||Path to citizenship?|
|United States of America||$500 000||Yes. After holding a green card for five years you can apply for citizenship.|
|United Kingdom (UK)||£2 million||You can apply for U.K. citizenship after five years of residency.|
|Portugal||€500 000 (or €350 000 if investing in real estate that is older than 30 years)||After five years you can apply for permanent residency. One year thereafter you can apply for citizenship.|
|Spain||€500 000||You can potentially gain citizenship after 10 years of living in Spain.|
|Greece||€250 000||You can apply for citizenship after 7 years of living in Greece.|
|Malta||€630 000||Yes, but you’ll need to make a €650 000 contribution to Malta’s National Development Fund (NDF).|
|Cyprus||€300 000||Yes, but you’ll need to make investments valued at around €2 million.|
LCR Capital Partners is a partner-owned, private equity investment firm that deploys debt and equity to experienced operators of top American franchise restaurant brands and real estate developers. LCR also assists high-net worth investors in South Africa, China, Brazil, and India acquire permanent residency for themselves and their immediate families in the United States through facilitation of an EB-5 visa.