From 2024 to the Future A Candid Conversation with Dr Juerg Steffen

Dr Juerg Steffen, CEO of Henley & Partners, offers insights into the present landscape of investment migration, and discusses the evolving trends and strategies that will define the path forward.

As investment migration pathways continue to rapidly evolve, could you share with us the top three trends that have significantly impacted the industry over the past 12 months?

There are several converging global trends that are having a notable impact on the investment migration sector. The seismic geopolitical shifts that are creating a more multipolar world, along with the rise of wealth in the global south, have seen interest and uptake surge in certain countries, such as India, South Africa, and Turkey. The BRICS group of Brazil, Russia, India, China, and South Africa has emerged as an economic force that can no longer be overlooked. With its recent expansion to include six additional countries, including the UAE and Saudi Arabia, the BRICS +6 grouping constitutes 36% of global GDP and 46% of the world population. And while there are many affluent individuals in these countries, they do not enjoy a great deal of travel freedom or economic mobility, hence their growing interest in investment migration.

Another trend driving our sector is the relentless and ongoing volatility we have experienced since we entered the 2020s, and this is exacerbated by a range of factors including unprecedented levels of violence and conflict in the Middle East, the war in Ukraine, and the mounting climate emergency. This is amplifying security, political, and economic risks, prompting affluent families globally to diversify their citizenship and residency and create a portfolio of domicile options through investment migration to extend their personal access rights to different jurisdictions to protect their lifestyles, wealth, and legacies. Even in highly developed countries with strong passports such as the UK and the USA, we are seeing sustained high interest in and demand for investment migration programs.

And finally, overburdened governments struggling to mitigate the relentless economic pressures caused by global phenomena such as Covid-19, climate change, and aging populations, have driven up the supply side of our industry. The competition to attract capital and talent has never been fiercer, and we have seen a significant increase in interest from governments across the world in either introducing new or reviving existing investment migration legislation and options.

Could you provide examples of countries that have developed new pathways or revitalised existing ones to entice foreign investors? And most importantly, what strategies have proven effective in this regard?

The UAE has been immensely successful in enhancing its liveability and drawing the talented and the wealthy to its shores. This is in part due to its business-friendly policies, but it has also launched and expanded its residence by investment offering to retain and expand its population of affluent residents, so qualifying applicants can invest in a licensed company, an accredited local fund, or real estate to secure a UAE golden visa. Last year, the UAE had the highest net inflow of HNWIs globally, so clearly this was a successful strategy.

The Antigua and Barbuda Citizenship by Investment pathway has also grown in popularity after it introduced a family option: the University of the West Indies Fund, contributing a minimum of $150,000 to the university for a family of a minimum of six persons.

Moreover, nations as varied as Canada, the UK, Portugal, and St. Lucia all offer a business option. Such investment pathways are often industrially specific, with residence or citizenship granted to participants who invest in commercial enterprises and industries to create jobs. Industrially specific investment migration tends to launch new projects that benefit all levels of society.

If we look back over the past few decades, St. Kitts and Nevis is another example of a small island nation using investment migration to restructure its economy and raise hundreds of millions of dollars in foreign direct investment geared towards laying the foundations for future growth and development. The St. Kitts and Nevis Citizenship by Investment Program has brought great value — at times estimated at 36% of its total revenue. Like several other countries, St. Kitts had a time limited offering that enabled investors to make a non-refundable contribution to its Sustainable Growth Fund (SGF).

In response to international criticism, we’ve observed certain countries, especially in the Caribbean region, enhancing the security, management, and economic aspects of their investment migration pathways. Do you believe these changes have effectively addressed the concerns raised?

My understanding is that the concerns were around issues of security and the potential abuse of investment migration pathways, and steps have been taken to strengthen due diligence, introduce mandatory interviews, and in the case of St. Kitts and Nevis, the minimum investment amounts have been increased. Due diligence is a fundamental aspect of every investment migration solution as it acts as a gatekeeper, not only protecting host nations from personae non gratae, but also safeguarding the integrity of the sector itself, so any steps to increase compliance are steps in the right direction.

As demand for investment migration continues to grow, especially now as political strife, societal breakdowns, and climate and financial crises proliferate across the world, the sector must rise to the challenge and work even harder to improve its governance and due diligence standards.

Some countries, like the UK, Portugal, and Ireland, have closed some of their investment migration pathways to new applicants. What do you think are the primary reasons behind such closures, and do you anticipate more countries following suit?

Different countries have their own reasons for making such decisions. The most successful investment migration pathways are designed to serve a certain purpose, and once that has been achieved, or if it is not being achieved, it is best practice to reassess and adjust the investment options. Since Brexit, the UK has been making changes to its immigration policies across the board, from refugees, to students, to workers, and high-net worth individuals have been no exception to this change. The country is, however, encouraging innovation with the launch of the Innovator Founder visa in 2023.

Ireland established its pathway to stimulate investment, which it has achieved, and it will also continue its Start-up Entrepreneur Programme. The door has not been completely closed to innovative, business-minded investors. Portugal’s parliament has reapproved the bill to now end its real estate investment migration option, with the programme generating nearly €500 million between January and August 2023. Other investment pathways remain, and Portugal is still issuing golden residence permits. So yes, certainly in time, other pathways will make changes or end certain options, but we will also see new options emerge in other countries. Both the supply and demand side of the sector continues to grow.

From your perspective, what additional innovations or improvements do you believe should be introduced to enhance the global landscape of investment migration?

The great wealth transfer has been a talking point for several years now and is truly underway. To enhance the investment migration sector and keep ahead, we need to be mindful of and take seriously the needs and aspirations of the next generation and be proactive to ensure that we remain as relevant to them as we currently are to their parents and grandparents. No matter where we are in the world today, we can all see and feel the very real effects of climate change, which Gen Z and Gen Alpha children are growing up with as part of their daily lives. Sustainability and the climate emergency are urgent issues for them to address. It would be valuable to see more ESG investment migration options being offered by governments that address these concerns and would benefit both host countries societies and the future of our planet.

Remote work and global nomad visas have become increasingly popular. What challenges and criticisms have these programmes faced, and how can they be improved?

Digital nomad visas have certainly gained in popularity, and although the nomads themselves are expected to bring economic benefits to the host country, it is not clear to what extent, and there are also tax implications to consider. They are still in their infancy, and over time it should become clearer how best to proceed to ensure that these visas are beneficial for all. For instance, red tape should be minimised, countries could consider offering tax incentives, and they need to ensure that it is relatively uncomplicated to obtain a work permit, open a bank account, set up a business, and of course, ensure that the tech infrastructure is efficient. Perhaps there could be project-specific nomad visas to address certain skills gaps, which would benefit the host country and nomads alike.

Given the rapid changes in the industry, what role do you see technology and digital solutions playing in the future of investment migration? Are there any emerging tech trends that you find particularly intriguing?

It is fascinating to observe in real time how the metaverse is reshaping many aspects of our society, even how sovereign states conceptualise and manage citizenship. We are now seeing the whole concept of sovereignty coming into question as the virtual frontier continues to expand. More possibilities are emerging, and nation states are beginning to explore how they can use the virtual world to grow their political capital and sovereign equity.

One way they are doing so is by offering virtual citizenship, with Barbados being the pioneer and first to launch a virtual diplomatic embassy in Decentraland. Such initiatives also provide nation states with new possibilities for diversifying the type of capital they attract. The metaverse is built on blockchain, so perhaps in future digital assets, cryptocurrencies, and NFTs will become accepted forms of investment. The shift towards e-citizenship could be transformative for investment migration, but as with digital nomad visas, they will require careful consideration on thorny issues such as tax — where do you pay it if you are a dual citizen and resident of both virtual and physical nations?

Looking beyond traditional investment migration, what innovative approaches or unconventional ideas do you think have the potential to disrupt or reshape the industry in the years to come?

As mentioned previously, seemingly futuristic ideas such as citizenship in the metaverse are now very real, and a KPMG report is predicting that eventually, digital citizenship could even replace passports and residence cards for the physical world. We already see Singapore using biometric technology and facial recognition to allow passengers to fly without passports or boarding passes. If they are successful in attracting wealthy and talented individuals, virtual nations could gain sufficient power, influence, and to rival real-world nation states. And then of course, if certain key regions move towards being almost borderless, such as has been on the cards in Africa for some time, this would disrupt the global mobility hierarchy.

On a more personal note, as you reflect on your five-year tenure as CEO of Henley, can you share with us the key milestones and challenges you’ve encountered along the way? What stands out as the most memorable highlight, and conversely, what was the most significant hurdle you’ve had to overcome?

The first six months or so of the Covid pandemic was certainly a very challenging and demanding period for our sector and our firm as many governments closed their immigration offices, and we were unable to submit residence and citizenship applications on behalf of our clients. It was a time of great uncertainty and anxiety as nobody knew what was going to happen next and how things would turn out. Clients had to wait extended periods of time to begin and complete their application process which impacted heavily on our business. However, it also underscored the importance of having a portfolio of resident and citizenship options that provides you with personal access rights to different jurisdictions around the world in times of crisis. This led to a significant spike in interest and applications, and this is a trend that continues to this day. One of our biggest achievements was the recent opening of our 40th office, with many more planned and in the pipeline due to the unprecedented global demand for residence and citizenship by investment by investors and governments alike. Our sector and the positive value we create for both global citizens and sovereign states is certainly going from strength to strength.

As one of the biggest players in the investment migration industry, Henley & Partners has landed in the hot seat more than once in recent years. Is there a thought provoking question that you’ve always hoped a journalist would ask you, yet it has never come up in an interview?

Generally, I wish journalists would ask me more about who is applying for the different residence and citizenship pathways and why they are interested in it. It offers a fascinating reflection of our world today that provides valuable insights into a country’s economic outlook and future trends. For instance, prior to Covid, a high percentage of our applicants came from emerging markets with relatively weak passports that limited their global mobility and aspirations. They were interested in either moving to a more developed economy or at least have the option to move or travel there without restrictions if they needed too.

During and after Covid, a new trend emerged that expanded our client base into highly developed and relatively stable nations in Europe and the US who woke up to the importance of having options in terms of where in the world they could live, work, invest and retire. The concept of domicile diversification and building up a portfolio of alternative residence and citizenship options that gives you and your family personal access rights to multiple jurisdictions has really taken off with investors all over the world. In this transitional period that is plagued by heightened security, political, and economic risks, wealthy families regardless of what citizenship they hold are revisiting their priorities to ensure their legacies, wealth, and lifestyles are protected, and that they don’t just have Plan B in place, but also a Plan C and D.