Foreigners are snapping up real estate in a tiny Mediterranean island to get EU citizenship, and it highlights the significance of second passports as status symbols among the wealthy

Hillary Hoffower

Jul 16, 2019, 01:23 IST

Foreigners are snapping up real estate in a tiny Mediterranean island to get EU citizenship, and it highlights the significance of second passports as status symbols among the wealthy

Foreign buyers are snapping up real estate in Malta.

Malta has one of the strongest real-estate markets in the world, reported The Wall Street Journal.
The draws of Malta are plenty: great weather, government incentives for businesses, and the possibility of becoming EU citizens.
Foreigners can take advantage of Malta's Citizenship by Investment (CIP) program and become citizens by buying real estate.
Malta isn't the only country where you can invest in citizenship - the opportunity is available everywhere from Thailand to Cyprus.
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Malta's real-estate market is on fire.

Thanks to a robust economy and government incentives to foreign buyers and businesses, the Mediterranean island's property market is one of the world's strongest, reported Ruth Bloomfield for The Wall Street Journal. Asking prices have increased by more than 10% in the past year, she wrote, citing Knight Frank's latest Global House Price Index.

The island is drawing in overseas buyers paying anywhere from $247,000 for a two-bedroom apartment on the south coast to $505,000 for a two-bedroom apartment on the Golden Mile along the northeastern coast (the most popular location for overseas buyers). A four-bedroom estate in the northern part of the island, Bloomfield wrote, is going for $4.7 million.

Malta's great weather, lack of language barrier, and laid-back lifestyle hold a lot of appeal for foreign buyers, but there are greater advantages at play. Alan Grima, CEO of Dhalia Real Estate Services, told Bloomfield that 60% of foreign buyers are from the EU, including workers of international companies who've opened offices in Malta.

But Americans are seeking the option to become an EU citizen.

Malta offers wealthy people 2 different ways to buy their way into citizenship via real estate

Malta's Individual Investor Program (IIP) offers citizenship to applicants who rent or buy a property, Bloomfield reported. They're taxed relatively little - income tax is a maximum of 35% and there are no wealth taxes.

There are several investment options to buy citizenship in Malta. If going the real-estate route, foreign buyers must invest at least €350,000 ($394,000) in property or a property rental contract for at least €16,000 ($18,000) to qualify for citizenship, Nuri Katz, president of international financial firm Apex Capital Partners, previously told Business Insider.

Buyers closing on property in Malta first must first sign a "konvenju" (promise of sale) with a 10% deposit and 5% buying tax, expecting the sale to close within three to six months, according to Bloomfield. Unless located in a designated development or purchased through a trading company, foreign buyers are only allowed to own one property. They must also hold the property for at least five years to qualify for citizenship in Malta, Katz said.

Malta's program is a Citizenship by Investment Program (CIPS), in which wealthy individuals invest in a country in exchange for citizenship. Once they have citizenship, they then have the basic rights of any other citizen of that country - like owning a passport, Katz said.

But a second passport buys more than a travel document - it also buys them status. "It's a status symbol - it shows friends you can afford it," Katz said. "I call it the black American Express syndrome."

Beyond status, there are also physical advantages to owning more than one passport. Armand Arton, president of Arton Capital, previously told Business Insider that investors primarily seek increased global mobility, better security and education, diversified business opportunities and tax planning strategies, and an improved quality of life.

And Malta isn't the only country where you can invest in citizenship - the opportunity is available everywhere from Thailand to Cyprus.