Exploring Offshore Investment and Residency Opportunities
South African HNW investors have a longstanding affair with offshore investments, choosing to hold a proportion of wealth outside of their home country to take advantage of opportunities in foreign markets. GlobalData’s 2016 Global Wealth Managers Survey found that the typical South African HNW investor offshores 32.2% of their total wealth. When compared to the global average of 18.7%, it is clear that investors in South Africa display a strong propensity for seeking opportunities abroad.
When it comes to investing offshore, HNW investors are motivated by an array of factors. In the case of South Africa, the strongest driver is geographic diversification. This can help reduce a portfolio’s exposure to risk and open the door to investment opportunities that would otherwise be inaccessible.
Investing in foreign markets may also provide investors with the opportunity to obtain residency. Many countries around the world offer residency-by-investment programs, enabling HNW investors to make the most of foreign financial opportunities along with greater education and lifestyle possibilities.
EU countries are of particular interest to South African investors. GlobalData research shows that half of South African HNW offshore wealth is held in this region, namely in the UK. Not only is this market a major safe haven but it holds historic ties with South Africa. However, with the UK losing some of its charm in light of leaving the EU, investors will do well to consider other EU countries in which to obtain residency.
For example, the property-specific program offered by Spain grants residency to individuals who invest €500,000 in Spanish real estate or a business and make at least one visit to Spain during their residency. And in Ireland, foreign investors can invest €2m in REITs listed on the Irish Stock Exchange or by investing at least €450,000 in residential property along with €500,000 in bonds. In short, these investment options require a lower minimum threshold compared to the UK and grant access to opportunities across the trading bloc that may otherwise be unattainable.
For South African HNW investors looking to diversify their portfolios and residences, they will do well to explore offshore opportunities and residency-by-investment programs. Working with a wealth manager that specializes in offshore holdings can provide the expertise and access to products that are needed for global diversification. Professionals who offer guidance in residing in specific markets can assist with local insight and the steps required for a successful application.