Exploring the future of investment migration: trends and developments to watch

Thought Leadership by Bruno L’ecuyer, Chief Executive, Investment Migration Council (IMC)

The past few years have been a real eye-opener about how unpredictable the future can be. Nobody could have guessed that by 2023, we would have just overcome a tough pandemic only to face a war in Europe, supply chain issues, a shaky energy scene, and skyrocketing inflation. Even the wealthiest countries are feeling the rising cost of living, while the changing political and economic alliances are shaping a new world order. It is still too early to say how all this will play out, but I will share a few thoughts on global trends and developments that can potentially influence the future landscape of investment migration.

New mobility regimes

Investment migration is rapidly evolving. As a result of the pandemic, the number of digital nomad visas has steadily risen, while many countries now offer either entrepreneur or start-up visas.

Estonia was the first country to launch a digital nomad visa in 2020. Just two years later, in 2022, more than 25 countries ran similar programmes, making it one of the most important trends in the immigration space in recent years. These programmes, which allow foreign individuals to live and work in the host country between six months and five years, are still relatively new and essentially an experiment. However, with an estimated 35 million digital nomads worldwide contributing US$787 billion per year, it’s safe to say that these visas are here to stay.

Elsewhere, start-up visa programmes have become increasingly popular to attract entrepreneurial talent. In 2022, around 40 nations, including most OECD countries, had some form of start-up-related programme in place. In fact, migration policies in many countries are moving away from being focused on traditional family or employment-related immigration and are crafted more around entrepreneurial and highly skilled individuals.

Start-up-related visas attract fewer negative sentiments, do not generally spur contentious opinions, and garner wider partisan support. Secondly, if appropriately managed, start-up visa programmes can potentially leave substantial economic multiplier outcomes on a nation’s economy, creating growth opportunities in new innovative areas. Meanwhile, the average age of multi-millionaires worldwide has decreased over the last two decades. Investment migration service providers report that in emerging market economies, the average age of applicants is between 35 and 45 years old. Many are young entrepreneurs spurring demand for active investment options instead of traditional passive alternatives.

One trend that is likely to continue is the increasing demand for investment migration as geopolitical tensions and market volatility create new desires for security.

Generation Alpha

Currently, investment migration is largely driven by Gen X and Millennial customers. However, the next big spending power is Generation Alpha: the children of Millennials born from 2010 to 2024. Although the demographic transition is still a way off, the investment migration community needs to start catering for these new realities.

Forecast to be the largest generation ever, by 2025, two billion of them will be living mainly in Asia. By 2030, the first Gen Alphas will be young adults and the recipients of the largest intergenerational wealth transfer in history whilst living in a digital world where social media and AI are the norm.

For Gen Z and Gen Alpha, themes such as the environment, general well-being, and technology ought to be more central, while those who wish to win them as clients need to adapt their communication methods. Bureaucracy, antiquated portals and slow processes will not attract the upcoming generations.

Virtual citizenship

If there was one headline that dominated business publications this past year, it was the arrival of the metaverse, which many believe will redefine how people interact with their environment and each other.

KPMG predicts that by 2040, digital citizenship will thrive, and many individuals will have given up their physical passports for virtual citizenship. They forecast, “There are at least 11 virtual nations now with a combined population of 200 million ‘citizens’ and a GDP above US$100 billion each. Their citizens enjoy higher incomes and live in ‘gated communities’ that have their own security. Benefits like virtual welfare, employment, and other amenities are vastly superior to those provided by physical nations, creating a substantial lifestyle gap between citizens of physical nations and those in virtual nations, who are dual citizens of the physical country they reside in.”

The future of the metaverse is far from certain and still several years away. However, a likely scenario is that individuals are physical residents of one country but meta citizens of another because they connect with the values, ideologies, and laws of the meta state more than with those of their base in the real world. Moreover, they conduct business with like-minded forward-thinkers in the metaverse, attend the best universities online, and invest in digital real estate using crypto.

If you think the idea is far-fetched, consider Estonia’s successful e-residency programme. While e-residents are permitted to open bank accounts, start companies, sign documents, and pay tax under Estonian jurisdiction and law, they gain no rights to live in Estonia, nor do they accrue any other kind of physical benefit.

Adapting to change

The future of migration policy is undoubtedly complex. However, one trend that is likely to continue is the increasing demand for investment migration as geopolitical tensions and market volatility create new desires for security. In addition, it is likely to continue playing a significant role in attracting foreign investment and funding key government activities in many countries. Given limited room to increase taxes, the opportunity to raise revenue from investment migration will remain a major motivation for countries to retain or introduce investment migration pathways. As such, the industry will likely remain an important tool for continued economic growth and stability. However, as the average age of multimillionaires decreases, and young entrepreneurs prefer more active investment options, investment migration must adapt quickly to the evolving market.