CITIZENSHIP: Global Events Spark New Millionaire Migration Trends

Henley’s 2023 Private Wealth Migration Report, using data from South Africa-headquartered wealth-intelligence firm New World Wealth, offers a snapshot of what global millionaire migration looks like for those who move for at least six months of the year. About 30% of these millionaires move through investment-migration programs, says Dominic Volek, Henley’s group head of private clients

“It’s returned a little more to normal again in terms of individual countries,” Volek says. China leads net outflows of millionaires with 13,500 prompted by frustrations with pandemic policies and a desire for greater political stability. China’s strict regulations on capital and currency outflows prevent many millionaires from diversifying their portfolios globally, he says. China is followed by India and the U.K. Australia leads net inflows with 5,200, followed by the U.A.E. and Singapore.

One of the most surprising things from the latest report, Volek says, is that the U.K. now sits at No. 3 for net outflows of millionaires, following the ripple effects from Brexit.

Though lifestyle typically comes to mind for many when they think about why millionaires migrate, many move with business on the brain. “It is quite possible if you are an entrepreneur in a place like India or China, your business can still run without you physically being there 24/7,” Volek says.

For those in emerging economies this can mean relocating to nations with rule of law and political stability to protect their business interests. Others have more granular objectives. Volek recently spoke with a client in Dubai “who now wants to set up his global supply chain and have a bit of a distribution network in Europe and the U.S.” The client is looking at which countries can offer the business incentives and tax and import duties, for example, Volek says.

Real estate opportunities are byproducts of migration, not a driver of it, yet governments may try to discourage an influx of new home buying. Notably, Singapore doubled the stamp-duty tax on real estate transactions for foreign buyers to 60% to discourage purchases from buyers overseas, particularly from China. The tax could steer some clients elsewhere depending on their wealth levels.

Volek spoke with Penta about factors driving millionaire migration including why a second passport can be beneficial for wealth holders, even if they don’t move.

Australia’s New Appeal

An increasing number of millionaires are saying g’day to Australia, with inflow projections rising about 37% this year from 2022. Volek says the country’s relative isolation, once a disadvantage, is now more attractive following the pandemic and the Russia-Ukraine war. It doesn’t hurt that Australia’s lifestyle and climate are “significantly better than a lot of other emerging markets, not only in the Asia-Pac region, but elsewhere as well,” he adds.

Although Australia is not an income tax-friendly jurisdiction—residents pay relatively high percentages on worldwide income—it offers attractive estate planning opportunities. For instance, there’s presently no inheritance tax compared with taxes of 40% or 50% in several major countries, including the U.S. or Korea.

Neighboring New Zealand, which also has an investor visa program and ranks 10th in millionaire inflow, expects 700 more millionaires before year-end, according to Henley. “Both countries have often been referred to as the billionaire’s bolthole for very wealthy Americans in Silicon Valley,” Volek says.

A Plan B for American Millionaires

Historically, residents of emerging nations with some level of economic or political uncertainty were the ones inclined to search for an alternative residence and citizenship through investment . Today, the U.S. is now the single-biggest new client market for Henley’s investment migration consulting practice. Most American clients do not physically move, yet, “the numbers of those getting their plan B or C in place is increasing significantly,” Volek says

This shift started after the initial pandemic outbreak in the U.S., when the European Union prevented Americans from entering E.U. countries. Suddenly, the biggest population of high-net-worth individuals “realized they were more exposed than they thought by only having an American citizenship and only the U.S. as a country of residence,” Volek says.

Now, Americans are increasingly looking for European footholds through the Golden Visa residence-by-investment programs in countries such as Greece or Spain or citizenship-by-investment programs in countries such as Austria or Malta. (Portugal’s popular Golden Visa program is ending for real estate investors.) This has led Henley to open three new offices in the U.S. to address demand. 

Visa-Free Passport Opportunities

“There’s a big portion of our clients who look for greater travel freedom and global mobility by acquiring another passport,” Volek says.

A Chinese passport allows visa-free entry to 80 countries, for example. By donating US$250,000 to the St. Kitts and Nevis passport through its citizenship-by-investment program, a Chinese citizen can acquire a St. Kitts and Nevis passport allowing visa-free access to more than 150 countries. Crucially, this includes the E.U. and U.K.

Singapore allows visa-free access to 192 countries, more than any other, according to Henley’s recently released 2023 Passport Index.