WEBVTT - Here's Why Golden Visas Are Being Polished

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>I'm Stephen Carroll and this is Here's Why, where we

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<v Speaker 2>take one news story and explain it in just a

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<v Speaker 2>few minutes with our experts here at Bloomberg.

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<v Speaker 3>This is the gold card, as you know, the Secretary

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<v Speaker 3>of Commerce and myself and some others have been working

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<v Speaker 3>on for quite a while. Essentially, it's the green card

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<v Speaker 3>on steroids.

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<v Speaker 4>The UK is considering a new invite only investor visa

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<v Speaker 4>that would cost five million pounds as the nation seeks

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<v Speaker 4>to revive its reputation as a wealth hub. Hundreds of

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<v Speaker 4>people have applied for those visas within the first few months.

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<v Speaker 2>Pledging over a billion dollars in New Zealand fans. For decades,

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<v Speaker 2>golden visas have offered wealthy investors an easier path to

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<v Speaker 2>move in country. The formula is simple, invest money to

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<v Speaker 2>gain residency and perhaps one day even citizenship. But that

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<v Speaker 2>bargain is changing. Some governments have decided the old model

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<v Speaker 2>went too far. Oh, Theys still want wealthy immigrants, but

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<v Speaker 2>on different terms. And while gold and visas aren't disappearing,

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<v Speaker 2>they are being redesigned. So here's why golden visas are

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<v Speaker 2>being polished. Our reporter, Charlie Wells, joins us now for more. Charlie,

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<v Speaker 2>First of all, what exactly is a golden visa?

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<v Speaker 1>Well, these are effectively residents by investment programs, and they've

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<v Speaker 1>been popular in some European countries. They've been popular in

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<v Speaker 1>some Caribbean countries and also Australia and New Zealand. And

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<v Speaker 1>basically what they do is they give wealthy investors, people

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<v Speaker 1>who can pony up tens of thousands, if not millions

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<v Speaker 1>of dollars, the right to reside in countries. And these

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<v Speaker 1>have grown in popularity at a moment where geopolitical tensions

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<v Speaker 1>have been making some people feel maybe less comfortable in

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<v Speaker 1>their home country than they were before, at a time

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<v Speaker 1>when a lot of people maybe want to come to

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<v Speaker 1>say Western Europe, or come to the United States where

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<v Speaker 1>they have maybe a little bit more freedom of mobility,

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<v Speaker 1>of movement of capital. And so these programs have been

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<v Speaker 1>really attractive for some of these people who are sort

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<v Speaker 1>of looking for a plan B. They've also been attractive

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<v Speaker 1>for countries who are looking for the investment that comes

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<v Speaker 1>with this, for some of the fees that come with this,

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<v Speaker 1>and then also the tax revenue that come if these

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<v Speaker 1>wealthy people start to reside in their countries. How hard

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<v Speaker 1>is a golden vasa to get? They're expensive, I think

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<v Speaker 1>that's the most important thing across the board. They tend

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<v Speaker 1>to reach into the hundreds, if not millions of dollars

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<v Speaker 1>as far as these sorts of investments that residents or

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<v Speaker 1>aspiring residents need to make. And one of the more

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<v Speaker 1>popular programs was in Portugal, where at one point it

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<v Speaker 1>was popular for people who wanted to get a golden

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<v Speaker 1>visa in Portugal to invest as little as three hundredundred

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<v Speaker 1>and fifty thousand euros in property that is basically the

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<v Speaker 1>price of a flat in Lisbon in some parts of Lisbon.

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<v Speaker 1>And so this really made that program popular, but it

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<v Speaker 1>also created something of a backlash, of a backlash in Portugal.

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<v Speaker 1>And then also you saw a lot of similar programs

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<v Speaker 1>kind of question the utility of this, and so they've

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<v Speaker 1>become more difficult recently.

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<v Speaker 2>So how have those debates been playing out in places

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<v Speaker 2>like Portugal, which you're choosing to tighten some of the

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<v Speaker 2>rules around their golden visas other countries have been winding

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<v Speaker 2>them down altogether? What's behind that?

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<v Speaker 1>A lot of this has to do with concerns about

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<v Speaker 1>both immigration and the housing market. So at once, we've

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<v Speaker 1>seen in the United States and in Western Europe heated

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<v Speaker 1>rhetoric about immigration, politicians looking to clamp down on borders.

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<v Speaker 1>At the same time, you've also seen housing prices increase,

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<v Speaker 1>and so there's a tendency in a number of protests

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<v Speaker 1>movements to actually key in to kind of focus in

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<v Speaker 1>on some of these Golden visa programs. Now, these programs

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<v Speaker 1>have brought in in some cases, billions of dollars to

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<v Speaker 1>countries who have them. The effect on the housing market

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<v Speaker 1>is a little bit more contested, right, how many people

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<v Speaker 1>actually take up these properties and kind of drive up prices.

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<v Speaker 1>But they're a popular punching bag because you can effectively say, look,

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<v Speaker 1>the actual citizens of this country are struggling with housing prices,

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<v Speaker 1>while you are allowing wealthy individuals to come buy property

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<v Speaker 1>that we can't afford, drive up the prices, and maybe

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<v Speaker 1>not even live here full time. So that's a narrative

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<v Speaker 1>it's almost impossible to ignore.

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<v Speaker 2>Yeah, certainly, and it becomes very tied up with that

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<v Speaker 2>key issue of housing, which is called shortages, and so

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<v Speaker 2>many cities around the world. It's su different picture though

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<v Speaker 2>if we think about what was happening in New Zealand,

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<v Speaker 2>because they've revamped their Golden visa offer recently to make

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<v Speaker 2>it more attractive to investors. Is there a lot of

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<v Speaker 2>competition then between countries to try and bring in these

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<v Speaker 2>wealthy people.

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<v Speaker 1>Everybody wants tax revenue, right, And what we know is

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<v Speaker 1>that wealthy people are very mobile. They can afford to

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<v Speaker 1>make property investments in numerous countries, they can afford to travel,

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<v Speaker 1>they can afford to make these sorts of investments. And

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<v Speaker 1>so it was interesting because, yes, at a time when

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<v Speaker 1>a lot of European countries have been tightening their restrictions,

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<v Speaker 1>increasing the amount of money that wealthy individuals need to make,

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<v Speaker 1>or even just shutting down their programs, New Zealand is

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<v Speaker 1>actually making it easier, right, so allowing wealthy migrants to

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<v Speaker 1>count philanthropic donations toward the investment requirements. So we know

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<v Speaker 1>that New Zealand's housing market has been in a difficult place.

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<v Speaker 1>We know that their economy has been in a difficult place.

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<v Speaker 1>So what you tend to see is this sort of

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<v Speaker 1>back and forth where when a housing market heats up,

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<v Speaker 1>there is resistance because people on the ground are concerned

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<v Speaker 1>when a housing market cools down we've been seeing in

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<v Speaker 1>New Zealand, you can see a little bit more of

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<v Speaker 1>an opening for these programs, more demand from the government.

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<v Speaker 2>The United States then started offering a new Trump gold

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<v Speaker 2>card late last year. What's different about that prograp and

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<v Speaker 2>what do we know about the takeup of it?

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<v Speaker 1>This was a striking policy announcement from Donald Trump. And

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<v Speaker 1>what differentiates this American program from a lot of the

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<v Speaker 1>other popular golden visa programs is the fact that instead

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<v Speaker 1>of making an investment in property, instead of making an

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<v Speaker 1>investment in say some sort of fund within a country,

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<v Speaker 1>you're just paying a million dollars. It's a fee, right,

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<v Speaker 1>So it's a fee, not an investment. And the idea

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<v Speaker 1>from Trump was to try to attract wealthy entrepreneurs, wealthy

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<v Speaker 1>individuals to the United States. The reality has been a

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<v Speaker 1>lot different because, as Bloomberg reported earlier in April, only

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<v Speaker 1>one person, according to the Administry, had been approved for

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<v Speaker 1>the program. So it's a flashy policy. It's one that

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<v Speaker 1>Trump has certainly tried to make the case for, but

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<v Speaker 1>the demand is just not there right now.

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<v Speaker 2>So overall, then, charitie, is it becoming easier or more

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<v Speaker 2>difficult for wealthy investors to secure these kinds of visas

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<v Speaker 2>and to move country on the basis of them. It's

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<v Speaker 2>a shifting landscape, and there's a tension where a lot

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<v Speaker 2>of policy, a lot of regulation has become more parochial.

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<v Speaker 2>But a lot of wealthy individuals, a lot of capital,

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<v Speaker 2>a lot of people have become more mobile.

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<v Speaker 1>And I think that there will continue to be attention

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<v Speaker 1>here where you have this demand from countries for a

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<v Speaker 1>strong tax base for talent, and you also have pushback

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<v Speaker 1>from people on the ground when economic conditions change. So

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<v Speaker 1>I think the reality is that we see changes in

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<v Speaker 1>these policies. You see countries that loosen the restrictions and

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<v Speaker 1>then tighten them. You see countries talking about them and

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<v Speaker 1>come sort of new and different ways that might change

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<v Speaker 1>the phrasing so they become a little bit more politically palatable.

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<v Speaker 1>So it seems like these programs aren't going away, and

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<v Speaker 1>there is certainly demand from all across the globe for them.

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<v Speaker 1>So it seems like they have a book continue.

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<v Speaker 2>Okay, Charlie Wells, thank you very much for more explanations

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<v Speaker 2>like this from our team of three thousand journalists and

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<v Speaker 2>analysts around the world. Go to Bloomberg dot com, slash explainers.

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<v Speaker 2>I'm Stephen Carroll. This is here's why. I'll be back

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<v Speaker 2>next week with more. Thanks for listening.