The United Kingdom. Australia. Canada. The United States. Taken together they are arguably the most foreigner-friendly investment locations in the world—even with new taxes (Canada), lending restrictions (Australia) and unwelcoming (the US) or world-shifting (the UK) policies that can have a negative impact. But there are other under-the-radar locations worth investigating for overseas buyers, locations with benefits that often rival the favourites.
The Usual Suspects
Locations particularly welcoming to overseas investors are that way for a variety of reasons. The most foreign investor-friendly locations are the ones with well-documented, transparent ownership laws, freehold property rights, favourable currencies, and appealing lifestyle environments. In addition to the previously mentioned big four, Japan, Malaysia, Singapore, Germany and Ireland rank high for business ties, proximity to Hong Kong and for their strong rental markets.
But other factors make some locations appealing, such as visa and residency programmes that guarantee citizenship and passports with a minimum investment. These programmes go both ways: they stimulate economic activity and (occasionally) fatten public coffers. Spain encouraged overseas investment during the height of its recession and, combined with new fiscal policies, pulled itself off the brink of disaster. The same thing happened in Portugal. Fortunately, both had something to lure potential investors in with: European Union residency.
Plenty of residency schemes exist, and they’re unlikely to go away. According to Knight Frank’s 2019 Wealth Report, “a record 26% of global ultra-high-net-worth individuals [are] planning to emigrate this year,” resulting in “a number of governments around the world … targeting globally mobile wealth through favourable residency or passport schemes.” Though the schemes target the super-rich, the property, government bonds and infrastructure investment required are welcoming to many, with entry requirements as low as €300 in Cyprus (for residency).
But for just as many countries that are wooing emerging wealth (largely from South America, Asia and the Middle East), many others are scaling back or clamping down on such programmes. “Singapore, Australia, New Zealand and Canada have all recently made it harder for the ultrawealthy to own property, become residents or passport holders while in England and Northern Ireland a consultation on an overseas buyer’s taxation (stamp duty) began in January 2019 as a measure to dampen demand and remedy property being bought and left empty,” stated Knight Frank on its blog.
In July 2018, New Zealand introduced its Overseas Investment Amendment Bill, though anyone can purchase apartments as a way to stimulate construction; Singapore increased its foreign buyer stamp duty to 20%; in Australia, the purchase of existing properties needs new approval from the Foreign Investment Review Board unless buyers have considerable business operations in the country; in Canada, overseas buyers pay an Additional Property Transfer Tax of 20% in British Columbia and a 15% Non-Resident Speculation Tax in southern Ontario; and at the end of 2018, the UK announced it was considering a stamp duty land tax of up to 3% on foreign purchases.
Which is not to say there aren’t plenty of locations that don’t apply extra taxes (or if they do, they’re moderate) or that all are tied to restrictive golden visa schemes. For investors who simply want to invest, Japan tops lists for overseas-friendliness. “It is getting more popular with Hongkongers [as they] travel to Japan so often over years and years, and know the area fairly well,” theorises Mandy Wong, head of international residential at JLL in Hong Kong. “The tax system is uncomplicated and holding costs are not high. There are no restrictions for foreign owners and most properties are freehold. It’s got a good rental market due to urbanisation and job opportunities.” Japan is ideal for medium-term investors, and the capital gains tax is 50% less if owners keep their property for five years. During that time, investors “could expect to see continuous capital growth, even after the Olympics, as the improved infrastructure and city regenerations mature,” finishes Wong.
Of course, residency and citizenship remain factors, and for investors looking for EU privileges, the best of the lot remains the low-key Cyprus—home to just 800,000 and notable for its welcoming attitude and Mediterranean hospitality. For investors seeking more than just residency, €2 million invested into property, business or alternative funds gets full citizenship. Additionally, Nicolai Caraseni of Casa Grande Cyprus argues that “investing in the United Kingdom requires GBP 10 million, and you get a passport in five years—if the investor lives in the UK for all five years. Cyprus is relatively low cost, it’s low bureaucracy, has sunny weather and the time frame for receiving a passport is up to six months. It makes Cyprus the best investment destination.” Cypriot passports offer access to any of 28 (possibly 27) EU countries.
A final location flying under the radar is Mauritius, just off the African coast in the Indian Ocean. Long a hotspot for luxury vacations, Mauritius is renowned for its multiculturalism, and progressive economics, politics and social development. Two decades of cross border investment has made the island a well-regulated, transparent market in an ideal time zone for global business. With Africa a crucial emerging economy, the island is gaining investment traction. “Mauritius possesses the right ecosystem through … an innovative business environment, a pool of bilingual, highly qualified professionals, modern banking and technological infrastructure, legal and accounting institutions, and an innovative listing and capital raising platform for Africa-focused investments,” argues Teeroomalay Ramasawmy, investment executive at the Economic Develop Board Mauritius.
Investor rights and repatriation of capital gains are protected, and the government has implemented foreigner-friendly legislation. Luxury residential, mixed-use development projects and infrastructure investment are among the most accessible, and popular, assets for overseas buyers, though more options are popping up every day. Finishes Ramasawmy: “The Economic Development Board is the regulator for all the different schemes as well as the one-stop shop for every investor likely to be interested in exploring the opportunity to invest, work, live and play in Mauritius.”
For more information about investment opportunities in Mauritius and Cyprus, speak to professional advisors at SMART Expo on 15-16 June 2019 at Hall 3G, Hong Kong Convention & Exhibition Centre. Get your FREE pass now.