Investing in Citizenship by Investment programmes with tangible yields

The last few years have been quite eventful for most, including the investment migration industry. The pace of change has been so rapid that many are feeling quite unsteady about what is around the bend – as a younger, more agile, and more astute demographic enters the market, this is a necessary time to relook at what Citizenship by Investment (CBI) programmes really have to offer.

Many CBI programmes are concentrated in the Caribbean, known as the cradle of Citizenship by Investment; these small islands with limited resources have benefited from the monetary injections to their economies.

CBI programmes usually offer uncomplicated investment options in the form of either a donation to the government, which is almost always ploughed into socio-economic projects such as building schools, hospitals, and necessary infrastructure such as roads, schools and bridges.

The other common route to invest in CBI nations is through the purchase of real estate – either existing or planned projects or under construction.

Investing in a fund option within a CBI programme offers a direct donation with no return, while real estate may provide potential rental income and property appreciation. Both options have pros and cons, so it depends on an investor’s financial goals, risk tolerance, and investment preferences.

In terms of real estate, the Commonwealth of Dominica stands out as having one of the most successful CBI real estate offerings. The Dominica CBI Programme, ranked second under the CBI Index, has been a constant and trusted programme for years. When the country introduced the real estate route, the Government was adamant to utilise the option to grow their tourism offering through hotel development, but at the same time to ensure that the investor was delivered a good return.

In Dominica, investors interested in real estate buy into government-approved hotel developments through share schemes. The Government ensured that only a limited number of developments were approved under the Programme to safeguard the investor and the country. The real estate option has benefited the country significantly, with at least three internationally renowned hotel brands choosing to establish a hotel on the verdant island. These brands include the Hilton, the Marriott and the Intercontinental. Notably, Secret Bay, a Relais & Chateau six-star villa resort in Dominica has consistently outperformed expectations, paying out returns to CBI investors every couple of years. This year, the property paid out US $1.5 million in returns.

Those applicants who invested in real estate in Dominica have certainly seen those properties appreciate over time, leading to healthy capital gains.

In some countries, applicants can purchase a private home which allows investors to either generate rental income if they choose to lease out the property or, own a tangible asset to use or enjoy personally.

For example, in St Kitts and Nevis, applicants can acquire alternative citizenship by investing in an approved private home, which can be a condominium or single-family dwelling. Even though the private home must be held for a period of seven years, it may be sold to another purchaser who wants to apply for CBI, if the Federal Cabinet is satisfied that substantial further investment was injected into the real estate by way of further construction, renovation or otherwise.

Grenada on the other hand has had to cancel and de-certify five real estate options that have taken far too long to get off the ground. The Grenadian Government announced in its Government Gazette on 4 August 2023 that the listed properties could not be advertised as listed government-approved projects and as such can no longer source investors.

The downside to investing in real estate is its illiquid nature, making it harder to quickly access funds. Property values can also be affected by market fluctuations, maintenance, economic conditions, and local real estate trends, making it a little volatile.

Some jurisdictions do not provide full transparency regarding their investment strategies – meaning investors may not be clear on what role the funds have in the economy, but countries such as Dominica have been very clear as to where funds have gone including building climate resilient homes, upgrading renewable energy infrastructure and the construction of a new international airport.

CBI options continue to offer value for international investors – not only are they straightforward and affordable – they also come with the opportunity to gain alternative citizenship in some of the most stable and safe countries in the world.