Business Irish

Sunday 23 October 2016

Red carpet rolled out for cash-rich Chinese investors

Simon Rowe

Published 29/11/2015 | 02:30

Irish residency status has been granted to 81 foreign investors in the past three years under a new scheme promoted by the Government, with the majority being Chinese nationals.
Irish residency status has been granted to 81 foreign investors in the past three years under a new scheme promoted by the Government, with the majority being Chinese nationals.

The Irish Government has been rolling out the welcome mat to wealthy Chinese investors for decades and the charm offensive is starting to pay big dividends. Cash-rich tycoons from China are queueing up to secure Irish residency in exchange for investment.

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The spin-offs have resulted in millions of euro worth of investments in property, bonds and businesses - and luxury high-street stores are also benefiting from these high rollers.

Irish residency status has been granted to 81 foreign investors in the past three years under a new scheme promoted by the Government, with the majority being Chinese nationals. Another 26 applications are under consideration, bringing the total number of applications to 107.

This wealthy elite has been granted residency in exchange for investing in Irish bonds, stocks, property and enterprises, or for making a large philanthropic gift or endowment.

By availing of the Government-backed scheme aimed at non-European Economic Area (EEA) investors, successful applicants and their family members are granted immediate Irish residency, even though the investors don't have to actually reside here to benefit ­- the only stipulation is they must visit Ireland at least once in every 12-month period.

The scheme, which is operated by the Irish Naturalisation and Immigration Service, has proved popular not just with China's wealthiest but with billionaires from Russia, Saudi Arabia, US, India, the UAE and Trinidad and Tobago, according to new figures released to the Sunday Independent under the Freedom of Information Act. Close to €50m has been invested in Ireland to date by approved investors..

Approved participants in the scheme are granted residence in Ireland for two years, which can be renewed for a further three years. After five years, they are entitled to apply for long-term residence in Ireland.

Irish residency status can offer non-EEA investors greater ease of travel in the EU and can offer benefits in terms of tax avoidance and asset security.

To be considered, investors have a choice of investment options: €1m in an Immigrant Investor Bond, at 0pc interest rate; €500,000 in an Irish enterprise for three years; €500,000 in an approved fund; a minimum investment of €2m in an Irish REIT listed on the Irish Stock Exchange; investment in a residential property of a minimum value of €450,000 and a straight investment of €500,000 into the immigrant investor bond, giving a minimum investment of €950,000 - or a €500,000 philanthropic donation.

The Department of Justice confirmed that the majority of investments by approved investors has been in the enterprise category with a total of 58 investments made in Irish-based businesses worth €29m, mostly involved in development of the hospitality sector, social housing projects and healthcare projects.

Of the remaining 23 investments, a total of 13 'mixed investments' have been made valued at €12m. Five Immigrant Investor Bonds were bought for a total of €5m, three endowments were made totalling €1.5m, and two investments were made in approved investor funds.

No investment has been made in any Irish listed REIT by an investor in the scheme.

Irish-based economist and China expert Leo Goodstadt, a former policy adviser to the Hong Kong government and an honorary fellow at Trinity College Dublin, says there is "a tide of Chinese money looking to invest overseas, especially in Ireland".

"Two years ago, the Chinese government in its official news media talked about 200,000 citizens with over €1m net in investable assets who plan to go overseas. As the Chinese currency the renminbi globalises and becomes convertible, there's a tide of Chinese money looking to diversify and find investments which pay a good return, are stable, and are in countries where that money is secure. Ireland is one of those countries."

"Ireland is also likely to benefit from a liberalisation of China's foreign exchange controls and the IMF's decision to make the renminbi a reserve currency," said Goodstadt. "Individuals have enormous wealth in China. That money now wants to come out."

The Chinese are the biggest investors in cash-for-citizenship programmes around the world, according to the Global Investor Immigration Council, with Russians and Middle East investors also very active.

"Many Chinese who have already made their fortune are looking to move abroad or gain alternative residence or citizenship options," the GIIC noted in a recent report.

The Department of Justice denied the programme is a 'passports for sale'-type scheme."The Immigrant Investor Programme offers no preferential access to Irish passports," a spokesperson said. "Successful applicants are subject to the same rules as any other migrant as regards eligibility for an Irish passport. This requires that the person resides in Ireland for 12-months prior to their application and for four of the eight years before that."

Such is the spending power of Irish-resident Chinese investors and Chinese tourists that luxury department store Brown Thomas is recruiting an additional 11 Mandarin speakers to its retail staff of 25 Mandarin speakers in preparation for the busy Christmas period.

A big factor that draws Chinese shoppers to Brown Thomas is that, uniquely among Dublin department stores, they have 12 in-store terminals that accept the China Union Card. As a result, cash-rich Chinese shoppers can splash out on European brands such as Hermes, Chanel, Louis Vuitton, Burberry and our own Waterford Crystal."Chinese customers are very knowledgeable about brands. Not only do they like the brands, but they see buying them in Europe as a way of guaranteeing they have the latest, genuine product," said Brown Thomas managing director Stephen Sealey.

The red carpet is well and truly being rolled out for Chinese investors.

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