Our client, Alexey V., contacted us in May 2017 with a request regarding obtaining a second citizenship for the purpose of visa-free travel. He was spending most of his time outside of Russia running his IT business. It was inconvenient for him to return to the country each time to get new visas.
In addition, the client wanted to invest in real estate. Caribbean programs were familiar to Alexey, and he was looking for a company that would help him find the right property for obtaining citizenship.
- 1 Why did you decide to apply for citizenship, and not for a residence permit in the EU?
- 2 What programs were considered
- 3 Comparison of Caribbean programs of obtaining citizenship via real property purchase
- 4 Why did the client choose the program of St. Kitts and Nevis?
- 5 Real Estate Market in the Caribbean
- 6 Application procedure
- 7 Fast facts
- 8 Expert opinion
- 9 Summary
Why did you decide to apply for citizenship, and not for a residence permit in the EU?
The client did not plan to reside in Schengen permanently; furthermore, he was interested in traveling to England, so a residence permit did not solve his problem. European citizenship programs were also well suited, but the budget he was ready to allocate with not more than $ 500,000, so the choice narrowed down to the Caribbean programs.
What programs were considered
Since the client was interested in receiving income from the purchased real estate, and the full readiness of the object was an important criterion, we offered him the following options:
- Share in Park Hyatt hotel located in St. Kitts;
- Share in Tamarind Hills hotel in Antigua and Barbuda;
- Several private homes in St. Kitts and Grenada.
Dominica was not considered, because it has very small choice of finished objects.
IMPORTANT NOTE! On April 5, 2018, the Government of St. Kitts lowered the property value threshold from $ 400,000 to $ 200,000 for a “collective investment”. According to these changes, 2 investors can buy one object worth $ 400.000 and get citizenship. The retention period of the object is not 5 years, as it was with a standard investment, but 7 years. In this case, the next owner of the property may also apply for citizenship.
Antigua and Barbuda also lowered the property value threshold to $ 200,000 for a “collective” investment. The minimum investment in a government-approved development project amounting to $ 400,000 can be divided in half between two investors. Thus, the share of each investor will amount to $ 200,000. Unlike St. Kitts, the discount is valid until October 31, 2018. According to the terms of the promotion, property acquired during this period can be sold after 5 years with the status remaining.
Comparison of Caribbean programs of obtaining citizenship via real property purchase
In the “Program comparison” section you can choose different programs and compare them by 14 criteria.
|St. Kitts and Nevis||Antigua and Barbuda||Dominica||Grenada|
|Minimum cost of property item, $||200,000*||200,000*||200,000||350,000|
|Government fees and due diligence, $||57,800||57,800||61,950||58,000|
|Total cost, per one applicant, $||457,800||457,800||261,950||409,200|
|Total cost, for a family of 4, $||566,900||470,400||305,200||428,200|
* As of 2017, the minimum value of property for obtaining citizenship was $ 400,000
Why did the client choose the program of St. Kitts and Nevis?
As soon as the client was interested in receiving income from the purchased property, he decided to make his choice in favor of buying a finished house.
IMPORTANT NOTE! Unlike the Cyprus Citizenship Program, where any property worth more than € 2 million is the basis for obtaining citizenship, in Caribbean countries only government-approved real estate gives the right to apply for citizenship.
Real Estate Market in the Caribbean
Choosing real estate in the Caribbean is not that easy since many objects are overvalued due to passport programs. We recommend carrying out a more in-depth study of developers’ proposals.
The price of some objects exceeds the market value by 50-100%, while they are difficult to be sold in the secondary market. The real situation in the Caribbean real estate market is different from what can be seen in fancy advertising brochures and presentations, therefore choosing an object requires special care.
However, there are also some positive prerequisites for investing in real estate. According to a report prepared by the Eastern Caribbean Central Bank, in 2016, the number of tourists visiting St. Kitts and Nevis increased by 3.7% and exceeded 1 million people. The average attendance of the island from 2008 to 2014 is 655,000 tourists a year.
For comparison: During the period from 2000 to 2007 this figure was significantly lower – 318,000 visitors per year.
Tourists visiting Saint Kitts and Nevis by years
Most of the tourists come from the United States, Canada, the United Kingdom and other Caribbean countries. Heavy inflow of tourists allows to count on a steady income from real estate.
We provided the client with 16 options of real estate in three countries with a description of profitability. Since income was the main criterion for the client, we also offered him an object not in the “luxury” style, without an ocean view and far enough from the beach. This property item was not a part of resort real estate, but it was sold with tenants. The house was divided into two parts, each being occupied by a family under long-term tenancy agreements. At the time of sale, tenants have been living in this house for 8 months.
Such objects are difficult to find without having a local affiliate on the island – they are not always available on the websites of real estate companies. The profitability of the object, exclusive of the cost of services of the property management company, was 5% per annum. As a result, the client settled upon this particular option.
For your information: In St. Kitts, Park Hyatt St. Kitts is a popular object which is listed among the world’s best new hotels according to “Conde Nast Traveler”, a tourist “bible”, published by the international corporation Condé Nast. More detailed information about this object can be found in our video review.
We have prepared a package of documents for applying for a citizenship in 15 days. The client paid 10% of the property value (program requirement), paid the due diligence fee, as well as 50% of the cost of our services. In early June 2017 the case was submitted to the Citizenship Agency.
The application was approved in 4 months, after which the client paid the remaining 90% of the real property cost and 50% of the cost of our services.
As a result, the expenses involved in applying for citizenship amounted to $ 467,800 (excluding the cost of Migronis’ services), including:
- $ 410,000 – the cost of the real property object
- $ 50,000 – government fee
- $ 7,500 – due diligence fee
- $ 300 – passport fee
For your information: On average, the actual duration of consideration of applications in St. Kitts is from 5 to 8 months. Sometimes the Citizenship Agency may request additional documents: regarding the origin of funds, utility bills, affidavits (notarized explanations of disputable situations), confirmation of solvency, second parent’s consent to obtaining citizenship by a child, etc.
There is also an expedited examination procedure which takes 60 days. The government fee for an urgent examination is $ 25,000 per main applicant and $ 20,000 per each family member over 16 years old (the amount covers due diligence fee).
The information on the applicant’s business and sources of funds specified in the application form undergoes careful check. Therefore it is necessary that only truthful data were provided.
Different programs have different requirements to documents. For example, in Dominica additional documents are much less likely to be requested, and the Vanuatu program is even more loyal to applicants. The main criterion for the success of a case there is the absence of outstanding conviction for serious crimes and the person’s not being included in the sanction list, wanted list or Interpol database. However, there is no real estate investment option in Vanuatu.
After obtaining citizenship and execution of the documents confirming the right of ownership, we re-executed the tenancy contracts and renewed them for one year, and also concluded a contract for real estate management with a local company.
Having analyzed various property objects, the client made his choice in favor of purchasing real estate in St. Kitts due to the following reasons:
- The object was put in commission long before the purchase and sale transaction;
- The house was sold with tenants and at the time of sale it was already generating profit;
- The object was built not long time ago, in compliance with local building codes. This is important because the Caribbean islands often suffer from hurricanes during the period from August to October.
Kristina Kurkuliak: “Choosing real estate in the Caribbean requires a very careful approach, because in most cases the objects are significantly overvalued. Fancy presentations often do not reflect the actual situation, some objects are not completed or their commissioning is delayed (for up to 5-7 years). In such cases, income is out of the question.
We recommend only those developers whose portfolio already includes successful projects, offering clients the options after analyzing the developer’s legal documentation. To assess the reliability of the developer, it is important to have an office in the Caribbean and know the local specifics.”
When choosing a property in the Caribbean, it is important to consider the following factors:
- whether the object has been built according to local building codes;
- whether it is insured in case of hurricanes;
- cost of similar object in the secondary market;
- whether there is a tourist infrastructure, etc.
When buying a share in hotels (a popular option in the Caribbean) you should:
- Find out the average occupancy rate of hotels in open sources such as booking.com, tripadvisor, etc., as this affects the generation of income that is distributed among holders of shares (applies to most part of projects);
- Check the developer’s portfolio to find out whether there were successfully completed projects;
- From what moment the income is paid and what is its size (for some objects, the investor can receive income of up to 2% per annum before putting the hotel into operation);
- Are there additional benefits of owning a share? In some cases, becoming a co-owner of the hotel, the investor receives discounts of up to 25% in all hotels of the chain, concierge service, the opportunity to stay at the hotel for up to 2 weeks a year, etc. (depending on the network);
- Determine the term of retention of the object to maintain citizenship;
- Find out the conditions for exiting the investment – whether the next owner of the property can obtain citizenship by purchasing this property after you? As soon as the secondary housing market is less developed, and citizenship programs create additional demand for real estate, it is important to understand whether you will be able to sell this property in 5 years without losing its value. Not all programs allow this;
- Get a comparison of the cost options of different objects in other countries. The cost depends much on the number of family members. In some cases, it is more cost-efficient to apply for citizenship through a donation, so we recommend comparing different options. In “Compare the Programs” section you can compare programs of different countries based on 14 criteria, and in the “Real Estate” section you can download presentations with a detailed description of objects.
In addition to real estate, we recommend paying attention to the following factors when choosing a program:
- How difficult it is to obtain citizenship and whether there is a guarantee of obtaining (percentage of refusals, requirements regarding documents confirming the origin of funds, etc.);
- How effective is the program currently. You can find out why it is important, in this article.
Only collaboration with specialists who have extensive experience working with different programs will allow you to choose the most suitable option.