For all the instability on its western banks, the Middle East had a good 2013 when it comes to individual wealth.
The region’s wealthy population witnessed the largest growth in the world last year, increasing by 15.3 per cent to 5,300.
These Ultra High Net Worth (UHNW) individuals, with assets of $30 million or more, boosted total wealth in the Middle East by 23.9 per cent in 2013 to $880 billion, according to Wealth-X, a company specialising in UHNW intelligence.
Unsurprisingly, local instability has also made these millionaires and billionaires keener to look at new avenues to keep their assets secure.
One of these means is second citizenship, which is more popular here than any other part of the world.
A report released by Wealth-X and second citizenship consultant Arton Capital revealed that UNHW Middle Easterners make up nearly 60 per cent of applicants for second citizenship or second residence schemes.
“The reality is that the world is a complicated place these days, and there is a lot of risk, especially for individuals who have some capital,” said Mykolas Rambus, CEO of Wealth-X. “Governments do change and they look at them differently from time to time.”
According to Rambus, there are great opportunities for businessmen and women from around the world to look at new geographies in ways they haven’t before.
“They are substantially helped by investor programmes, which you have to partake in to be able to enter those markets,” he added.
Countries known for both their instability and restricted worldwide travel options were found to be the most likely to apply, with Pakistani (17 per cent), Lebanese (15 per cent), Egyptian (seven per cent) and Syrian (seven per cent) applicants making up the top four.
Second citizenship offers greater stability and security, tax efficiency, ease of travel, a higher standard of living, increased options for children’s education and investment opportunities, according to the report.
But it does not come cheaply. Citizenship schemes demand anything from $100,000 per individual, in the case of Dominica in the Caribbean, to up to five million Euros, in the case of Cyprus.
As a result, the average net worth of a second citizenship applicant, at $205 million, was well above the $135 million global UHNW average, with billionaires found to be five times more likely to apply.
Given its close proximity to the Middle East, Europe has proven a popular destination for second citizens, accounting for over half of applications, despite an influx of cheaper Caribbean schemes over the past five years.
Cyprus, Malta, Bulgaria and Hungary all offer a clear residence and citizenship path, with Portugal, Spain and Greece only offering residency.
“Europe represents more security than the Caribbean and a better long term investment in residency or citizenship,” said Armand Arton, president and CEO of Arton Capital.
Arton opined that wealthy Middle Easterners will continue to make up the bulk of second citizenship applicants, while China and India are set to account for the lion’s share of growth in second residence schemes.
However, he admitted there is still some work to be done in making sure that foreigners buying their way into citizenship are not met with hostility from the local population.
According to Arton, the benefits of such schemes for host countries, like job creation and much-needed foreign investment should be made more visible.
“These need to be presented by governments to the media in order to justify why these programmes should exist,” he stressed.
“This is a very easy low hanging fruit for journalists or political opposition to snap at, saying you’re selling our nationality, our rights to own land, and this will change the demographic of countries.”