Russia is looking to join other countries that have rolled out fast-track residency schemes that have boosted foreign investment, a lot of it from mainland Chinese looking for business and property opportunities.
“Golden visa programmes in many countries are made to increase the flow of foreign investment and are working quite successfully,” said Alexander Shatalov, chief executive officer, Savills Russia. “I am sure that such initiatives have good potential for the Russian market as well.”
Moscow has said it is considering issuing golden visas, an initiative that would allow naturalisation via economic contribution for the first time in Russia’s history. The proposal paves the way for successful applicants to work and live in the country.
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Although investors residing in complex jurisdictions such as African and Middle Eastern countries are most likely to show interest in the programme, businessmen and entrepreneurs from mainland China might also find it appealing because of the business opportunities in Russia.
“The potential Russian golden visa is likely to be of great interest to investors from mainland China, with both nations already sharing a very good relationship,” said Arthur Sarkisian, managing director at immigration and real estate consultancy Astons.
The scheme could provide a number of incentives to successful applicants, such as visa-free travel to 35 countries including South Africa, Cuba, Israel, Argentina and Brazil. They could also start their own business without needing a patent or work permit, and would benefit from the country’s compulsory medical insurance and other social services.
There is also a strong tax incentive: while China’s tax rate goes as high as 45 per cent for annual income exceeding 960,000 yuan (US$149,000), Russia’s personal income tax on all worldwide earnings is capped at just 15 per cent.
Details have yet to be confirmed, and approval of the bill has no clear timeline, but one of the options is a 10 million roubles (US$134,611) investment in a business that creates 10 jobs for local people, potentially making it one of the cheapest residency-by-investment schemes, according to local media reports. Other routes under the scheme include a 30 million rouble investment in real estate or Russian government bonds.
Popular golden visa schemes such as Portugal’s require at least a €250,000 (US$303,000) investment. Thailand, meanwhile, allows foreigners to obtain residency for a minimum amount of 600,000 baht (US$19,177).
Since the launch of Portugal’s golden visa scheme in 2012, it has netted €5.8 billion in investment with €5.3 billion of that going to property purchases, according to the latest government data.
Since 2005, state-owned and private Chinese companies have invested about US$56 billion in the Russian Federation, according to data published by US-based think tanks the American Enterprise Institute and the Heritage Foundation. The property sector raked in US$4.85 billion in the period.
An estimated 200,000 to 300,000 Chinese people were living in Russia in 2020, according to a report by the Global Times, a tabloid affiliated with the Communist Party mouthpiece, the People’s Daily.
“We’ve seen a number of golden visa offerings evolve to provide a real estate channel for investment and this could no doubt happen in Russia once the foundations have been properly established,” Sarkisian said.
The property market is attracting attention from buyers from the Middle East and Asia, including China, according to Shatalov of Savills, with their demand for luxury real estate accounting for 5 per cent of the total market.
The segment already has its attractions, with or without the golden visa scheme.
Average home prices in Moscow were US$393 per square foot in 2020, according to data from property consultancy CBRE. In comparison, average home prices in China’s top-tier cities such as Beijing, Shanghai and Shenzhen range between US$607 and US$738 per square foot.
Luxury property prices in Moscow grew 5.4 per cent in 2020, according to Savills.
“It is also worth noting that new luxury projects are actively entering the Moscow market,” Shatalov said. “So in 2021, Moscow luxury real estate will be replenished with 16 new projects. This is almost three times more than the area of new projects of 2020. The average cost of a new proposal will increase by 31 per cent.”
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