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Former Wealth Magnets Are Losing Their Luster

More millionaires are forecast to move to new countries in 2023 and 2024 than ever before.

Following reports earlier this year that America’s wealth is on the move comes a new report, the Henley Private Wealth Migration Report 2023, which projects movement of the wealthy globally, also predicts the largest outflow of high-net-worth individuals from the United Kingdom since 2016’s Brexit referendum. With an estimated 3,200 HNW individuals set to leave in 2023, almost double the amount from last year, the nation trails only China and India in the loss of millionaires for the year.

The bleak forecast, according to Sunita Singh-Dalal, a partner at Private Wealth & Family Offices at Hourani in Dubai, is due to “the recent unsettling British ‘Non-Dom debate’ triggered by unprecedented political volatility, coupled with rising debt, a dysfunctional healthcare system, high crime rates, and a general sense of lingering malaise.” The non-domiciliary legislation, a preferential tax system that offers expats the remittance basis of taxation, has become the forefront of debate in the country about whether it should be removed, following the media coverage surrounding Prime Minister Rishi Sunak’s wife, Akshata Murty, who took advantage of the favorable tax treatment. The effects of Brexit also continue to make it harder for HNW individuals to move around between the United Kingdom and European Union, a major perk that many enjoyed pre-Brexit.

If some of these factors sound familiar, it’s because Henley & Partners’ USA Wealth Report 2023 earlier this year revealed similar woes about America, citing political polarization caused by partisan conflicts, and societal issues such as mounting pressure to increase taxes on the rich, as well as rising crime rates and debate around gun control as reasons for why the United States is losing its luster as a prime destination for wealth migration. Luckily for the United States, data from the Henley report shows that America remains the world’s most influential wealth hub, forecast to have the fourth highest net inflow of millionaires globally this year, despite the uptick in outflow.

Pre-Pandemic Patterns Return

Though the Covid-19 pandemic had some effect on where HNW individuals chose as migration investment options, the steady outflow of millionaires continues as it has for the past decade for both China and India. Surprisingly, the United Kingdom beat out Russia for the number three spot, with Russia seeing some 3,000 HNW individuals leave this year (though to be fair, 8,500 left in 2022 following the invasion of Ukraine, so it’s possible a large chunk had already went looking for greener pastures).

As for net inflow of HNW individuals, Australia is expected to reclaim the top spot, returning to its pre-pandemic status, with some 5,200 new millionaires, and Dubai to drop to second after its record-breaking year in 2022; the United States, Singapore and Switzerland round out the top 5. Overall, the report finds that levels are trending toward pre-Covid-19 patterns, except for the United States and United Kingdom.

Investment Migration Programs

Popular migration programs, such as Portugal’s Golden Residence Permit Program, Austria’s citizenship by investment offering and St. Kitts and Nevis’ Citizenship by Investment Program, Canada’s Start-Up Visa Program, Italy’s Residence by Investment Program, Greece’s Golden Visa Program and Spain’s Residence by Investment Program are especially appealing right now in light of uncertainty and volatility in some of the previous top destinations.

According to Dominic Volek, Group Head of Private Clients at Henley & Partners, affluent individuals are no longer just looking to acquire residence rights or citizenship for investment purposes; “more investors are considering relocating their families for a range of reasons, from safety and security, to education and healthcare, to climate change resilience and even crypto-friendliness.” The report shows that the highest-ever number of millionaires are forecast to move to new countries in 2023 and 2024, with many doing so via these investment migration programs. Record numbers of HNW individuals inquiring about the programs, particularly Americans and Brits driving the demand, might be a boon for estate planners and financial advisors as clients look to sort out the nuances of investment migration opportunities.

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