Europe is having a distress sale on visas

London

MAYFAIR, a well-heeled neighbourhood in central London, has attracted the world's elite for decades.

Only a short walk to Hyde Park, its luxury town houses include spacious basements with swimming pools and can easily cost more than US$10 million. Ferraris and other high-end sports cars often line the streets. Wealthy foreigners are drawn to the area because Britain's immigration rules have made it relatively easy to settle in the city, as long as they invest at least £2 million (S$4.1 million), or US$3 million, in the economy.

But lately there are alternatives if that's too rich for a well-off immigrant's blood. Rival residency programmes have sprouted across the European Union to give wealthy investors access to the 28-country bloc for as little as 250,000 euros (S$382,500), or US$280,000, for instance, in Latvia.

Some of Europe's hardest-hit economies, including Greece and Cyprus, offer the programmes - often called golden visas. They are aimed specifically at wealthy people from China, Russia and elsewhere willing to pay top dollar for the right to live, and sometimes work, in Europe.

In return for real estate purchases or other investments in a country's economy, the world's wealthy are offered fast-tracked residency or even citizenship. The investment-for-residency programmes are a way to replenish depleted government coffers, especially in Southern Europe.

"When the crisis hit, European countries that didn't already have a visa plan started to take this more seriously," said Eric Major, chief executive of Henley & Partners, a consultancy that has advised several European governments on creating visa programmes intended for wealthy individuals.

"Governments are now structuring their immigration policy to attract the investors that they want." The United States offers similar residency visas to as many as 10,000 wealthy people each year, provided they invest at least US$1 million and create at least 10 full-time jobs.

In Europe, the programmes have not been universally welcomed. Politicians have warned that governments are undermining what it means to be a citizen by rushing to embrace the world's top one per cent. Critics say the visas give too much priority to the wealthy over other immigrants, many of whom have lived for lengthy periods in their adopted countries or have fled persecution in their homelands.

Some European countries and Canada have been forced to overhaul their programmes after they were flooded by wealthy applicants. Economists have also questioned whether the newly arrived wealthy actually provide an economic boost. Recent scandals, including one in Portugal in which visas were said to have been handed out last year to people who had not made the requisite investments, have prompted criticism that investment-for-residency programmes are not in the public interest.

"It's the sale of citizenship by instalment," said Ana Gomes, a Portuguese politician. "Golden visas are an insane programme, because obviously they are conduits for importing organised crime into the European Union."

While some dislike the residency initiatives, European governments are bending over backwards to attract new investors, as wealthy people pour millions of dollars into economies outside their homelands.

The push comes as unemployment in countries such as Spain remains in the double digits. Europe's economy grew barely one per cent last year, compared with 2.4 per cent in the United States.

Some programmes, including those in Cyprus and Malta, aim squarely for the super rich. By investing roughly 2.5 million euros, or US$2.8 million, an individual can receive immediate Cypriot citizenship, which brings the right to work or live anywhere in the European Union, as well as easy access to the United States and other Western countries.

In Malta, a combined 1.2 million euros, or US$1.3 million, investment through a donation to the government, as well as in real estate and government bonds, is required, though wealthy individuals can apply for citizenship only after holding Maltese residency for one year.

In Britain, home to one of Europe's most exclusive programmes, the right to local residency for up to five years requires a US$3 million investment, and individuals must live in the country for at least half the year. For rich investors, the British plan offers the chance to live in London, if they choose, and to send their children to worldclass schools while investing in the British property market that has remained a bulwark against the global financial crisis.

"There's certainly competition between programmes," said Yuri Botiuk, a foreign investment partner at Pinsent Masons in London. "But the UK has all the history, culture and education opportunities that countries like Cyprus just can't offer."

For those on a budget - at least compared with higher-priced visa programmes that demand millions of dollars of investment - many southern European countries' visa programmes involve significantly less cash. In Greece, for example, wealthy people can gain long-term residency after buying local property worth roughly 250,000 euros, or US$280,000, roughly the price of an apartment in central Athens.

These programmes have become particularly popular with China's new millionaires, many eager to reduce their dependence on their own country's economy. Portugal, which started its own visa initiative in 2012, has attracted a great deal of Chinese investment.

Over the past two years, the Portuguese government has issued about 80 per cent of its roughly 1,800 golden visas to Chinese investors, who have invested more than US$1 billion in the country's economy, according to government statistics.

Analysts said cost-conscious investors were attracted by Portugal's relatively low-key demands, including buying property valued at about US$560,000. And Portugal requires people to spend only one week in the country during the first year of the programme to maintain their residency, while they can travel to almost all of Europe without additional visas.

"In Portugal, you can gain residency relatively easily and then travel throughout Europe," said Kamal Rahman, head of the immigration unit at Mishcon de Reya. "If you're looking to get another passport, these programmes make a lot of sense." NYT