Wealth Migration

Global economic growth is stagnating while global mobility increases. The implication of this is that nations and wealthy individuals alike have reached a point at which diversification is essential to future prosperity.

For wealthy individuals, diversification means thinking beyond equities and fixed income. Citizenship, residence, and property in alternative jurisdictions are becoming essential for the world’s wealthy, given the security, opportunity, and diversification they can deliver.

Global wealth may be about to decline, driven by uncertain financial markets, sluggish economic growth, and rising trade tensions. High-net-worth individuals (HNWIs) will be significantly affected. After increasing for seven consecutive years, their numbers have thinned by 200,000 to about 18 million individuals, while their collective wealth has fallen nearly 3% to about USD 68.1 trillion.

However, this smaller group of individuals have become more mobile than ever. Approximately 108,000 migrated last year, up from 95,000 the year before. Some 36% of ultra-high-net-worth individuals around the globe (those with net worth exceeding USD 30 million) hold an alternative passport — up from 34% in 2018 — and 26% plan to emigrate permanently.

China, India, the Russian Federation, and Turkey saw the largest outflows of wealthy individuals during 2019, underpinned by concerns about authoritarianism, safety, pollution, and economic insecurity. Canada, Switzerland, and the US were top destinations of choice for these individuals, due to the business opportunities on offer, high living standards, and robust personal liberties. However, Australia topped the list, with around 12,000 HNWIs moving there during the year, seeking safety and stability, high-quality education and healthcare, and strong economic growth, not to mention an attractive climate and no inheritance taxes.

Smaller nations are also welcoming HNWIs in large numbers. Cyprus, Greece, Malta, and Portugal are popular destinations, partly due to their membership of the EU. Caribbean states including Antigua & Barbuda and St. Kitts & Nevis saw strong inflows of wealth, too.

Migration to many of these nations is facilitated by residence- and citizenship-by-investment programs, which recently accounted for almost a third of HNWI migrations worldwide. For growing numbers of wealthy individuals and families, residence or citizenship in an alternative jurisdiction is now comparable in importance to the equities, fixed income, and real estate assets they hold.

Supply of investment migration programs has also increased — over 100 of the world’s nations currently have one in place. Trading the right of residence or citizenship for investment flows is a pragmatic way to meet financial needs without adding to already burdensome debt levels.

Growing numbers of wealthy and talented individuals around the world are eager to diversify their wealth — broadly conceived — by moving themselves, their skills, and their capital to new countries, which are diversifying their economic growth options by rolling out the red carpet. It’s a win–win scenario.

Sources:
Horobin, William. 2019. ‘The World May Have a Bigger Problem Than a Potential Recession’. Bloomberg News. November 21. https://www.bloomberg.com/news/articles/2019-11-21/the-world-may-have-a-bigger-problem-than-a-potential-recession
Credit Suisse. 2019. Global Wealth Report 2019.
AfrAsia Bank. 2019. Global Wealth Migration Review.
Knight, Frank. 2019. The Wealth Report.
Zuvela, Maja. 2019. ‘Montenegro launches scheme offering citizenship for investment’. Reuters. January 3.

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