New Zealand has long been known as a sanctuary for the ultra-rich, thanks to its geographic isolation and perceived political tranquility. Over the years, many billionaires have targeted the country for their “boltholes”, applying for visas or citizenship, parking their mega yachts, and even attempting to build enormous bunkers in the isolated foothills of the South Island. However, in recent times, investor visa applications have plummeted, and some are questioning whether the country has lost its appeal to the global elite. In this article, we’ll take a closer look at the decline in investor visa applications and explore the reasons behind it.
Background on New Zealand’s Investor Visa
New Zealand’s investor visa program allows wealthy individuals and their families to obtain residency in the country by investing a certain amount of money. The program has been in place for many years, but the criteria for obtaining the visa were changed in mid-2022. Under the new criteria, applicants must invest at least NZ$15m over more than three years – only half of which can be in passive investments – or $5m if the funds go directly to a New Zealand business. The old scheme required a $10m investment, but it could be placed in very low-risk investments, like government bonds.
The Decline in Investor Visa Applications
According to the Ministry of Business, Immigration, and Employment (MBIE), just 15 people have applied for the new investor visa since it was launched six months ago. That compares with 492, according to BusinessDesk, who applied in 2021 under the previous criteria, which was in place until mid-2022. The drop in visa applications has caught international attention, with Bloomberg declaring “rich foreigners spurn New Zealand” and reporting that the “ultra-wealthy appear to be losing interest” in the country.
Reasons for the Decline in Applications
One reason for the decline in applications is the stricter requirements under the new criteria. The new criteria require investors to invest in active investments, rather than passive, lower-risk ones, which is a shift that some investors may not be comfortable with. Another reason is that approved investment options – a requirement of the visa – have been slow to emerge. While the visa itself has technically been open since September 2022, the New Zealand Trade and Enterprise only began releasing the range of approved investments in February.
The Global Economic Environment
The global economic environment, which is extremely volatile, is also a factor in the decline in applications. Because the new criteria require people to put money in such high-risk types of investments, the type of person that New Zealand will attract is only going to be the sort of person who not only has that amount but can afford to lose that amount of money.
Impact on New Zealand
The decline in investor visa applications has raised questions about the impact on New Zealand. The country has long been seen as a destination of choice for wealthy individuals looking for a safe haven, and the decline in applications could have economic implications. The government will need to explore new ways to attract foreign investment to ensure that the country continues to grow.
Changes to the Investor Visa Program
The decline in investor visa applications has led to calls for changes to the program. Some experts believe that the criteria for obtaining the visa are too strict, and that the government needs to be more flexible in its approach. Others argue that the visa program should be scrapped altogether, as it has been criticized for allowing wealthy individuals to buy their way into the country.
Other Countries’ Approach to Investor Visas
New Zealand is not alone in its approach to investor visas. Many countries around the world have similar programs, and some have been re-evaluating them in light of concerns about the acquisition of wealth and strained diplomatic relations with certain countries. For example, the UK scrapped its “golden visa” scheme earlier this year, which allowed wealthy individuals to obtain residency by investing at least £2m in the country.
Criticisms of the Investor Visa Program
The investor visa program has been criticized for allowing wealthy individuals to buy their way into the country, bypassing normal residency requirements. This has led to concerns about the impact on local communities, as well as the potential for money laundering and other illegal activities. Critics argue that the program should be abolished or significantly reformed to ensure that only those who genuinely contribute to the country are allowed to stay.
Impact on Local Communities
The influx of wealthy individuals into New Zealand has not always been welcomed by local communities. In some cases, the arrival of billionaires has led to tensions with local residents, who feel that their way of life is being threatened. There have also been concerns about the impact on the housing market, as wealthy individuals buy up large amounts of property, driving up prices and making it harder for ordinary people to find affordable homes.
The Future of the Investor Visa Program
The decline in investor visa applications has raised questions about the future of the program. Some experts believe that the government needs to do more to attract wealthy individuals to the country, while others argue that the program should be scrapped altogether. Whatever the outcome, it is clear that New Zealand will need to find new ways to attract foreign investment and ensure that its economy continues to grow.
Conclusion
New Zealand has long been seen as a sanctuary for the ultra-rich, but the decline in investor visa applications has raised questions about whether the country has lost its appeal to the global elite. While the government has introduced new criteria to make it harder for wealthy individuals to obtain residency, some argue that the criteria are too strict and are turning away potential investors. Whatever the outcome, it is clear that New Zealand will need to find new ways to attract foreign investment and ensure that its economy continues to grow.