Grenada: Citizenship with a beach view
February 8th 2018
Words by Sean Werger, Principal at Kimpton Kawana Bay
Finding an effective and secure Citizenship by Investment programme is a complex task. Appealing opportunities such as the one offered by Grenada do not come along very often, writes Sean Werger, Principal at Kimpton Kawana Bay
Personal Security & Second Citizenship
In a world of increasing turmoil, many high net worth individuals are seeking to become global citizens by securing a second, or even third, passport. The motivation for many is to protect themselves and their families from political and economic risks, as well as predatory wealth confiscation and taxation. Personal security is also a key motivator, with many seeking an exit strategy for themselves and their family to escape political or economic instability. For some it is the best form of life insurance. A lot of international business people also need a second passport or citizenship so they can enjoy greater visa-free travel than allowed by their current passport. Visa restrictions on their existing passport can make international travel tiresome and inefficient. In some cases, there are also good reasons for having a second citizenship or residency from a tax and investment perspective.
The Grenada CBI programme
Additionally, smaller countries often need new ways to attract money in order to develop their social and tourism infrastructure, leading many to develop Citizenship by Investment (CBI) programmes. In 2013, Grenada launched its CBI programme and by early 2015, the Grenadian government had approved several projects while receiving a steady flow of applicants. In 2016, the CBI initiative continued to gain traction in the global market, and Grenada now has one of the world's top ranked CBI programmes.
A Safe Citizenship by Investment Option
When investing money in a second citizenship, individuals want to ensure their investment is safe and that they can get a return on their money with interest. With tourism continuing to surge worldwide, investing in resorts can be an effective use of assets. Located on Grand Anse Beach, Grenada's most popular resort beach, Kimpton Kawana Bay offers the opportunity to purchase a condominium with a freehold title that then participates in a rental pool programme. With one of the world's most desirable CBI programmes available in Grenada, such an opportunity presents considerable benefits.
Clear, blue skies
CBI programmes are generally ranked by the level of visa-free travel allowed by the country's passport, the cost of the programme, the quality of the associated investments, the due diligence carried out to ensure the long-term integrity of the citizenship and the processing time for approval. Based on these factors Grenada's CBI programme consistently ranks as one of the world's most desirable. This has helped propel Grenada's citizenship programme to the top end of the world rankings table, and it is attracting a lot of international attention.
The programme allows individuals and their families to obtain citizenship and, as citizens, the right to residency in Grenada. Applicants must apply through licensed agents, and can choose to make either a USD $200,000 non-refundable donation to the National Transformation Fund, or buy government-approved real estate for a minimum investment of USD $350,000.
Applying for Grenadian citizenship is simple and easy. There is no physical residency requirement, no need to visit Grenada during the application process, no requirement to reside in Grenada before or after citizenship is granted and no education or management experience is necessary. Furthermore, it only takes about 90 working days to process the application, and it is the only CBI programme where your passport is issued as part of the process. Processing fees are also minimal.
Citizenship of Grenada grants a person visa-free travel to over 120 countries, including the EU Schengen area, the UK, China, Singapore and Russia. It is one of only six countries in the world that has a visa waiver agreement on a 30-Day Stay Permit with China. Grenada is a member of the United Nations, the Organisation of American States and the Commonwealth, which offers personal protection in member countries across the globe. Grenada also allows dual citizenship, negating the need to renounce any other citizenship or passport.
Grenada is the only country in the world with an active CBI programme that affords its citizens the opportunity to live in and operate a business in the US through the USA E-2 Investor Visa. Grenada also has a source-based taxation system, meaning citizens that are tax residents in Grenada are not subject to Grenadian tax on their foreign income. Nor do they pay any wealth, gift, inheritance or capital gains tax. A person can sell their property after only three years, which means capital can be released earlier than any other Caribbean citizenship programme without affecting citizenship.
At present, Grenada's economy is expanding in the tourism, agriculture, and manufacturing sectors. As part of the Eastern Caribbean Central Bank and Currency System, its currency is stable, secure and tied to the US dollar. Business can also be conducted in US dollars. Additionally, the government offers numerous tax concessions and fiscal incentives, which makes doing business in Grenada very appealing.
It is also a great place to holiday or live. In terms of crime rates, Grenada is one of the safest countries in the Caribbean. It sits below the hurricane belt and has a wonderful year-round climate. With its beautiful coastline, mountainous interior, colourful communities, fragrant spice markets, friendly people and international airport, it is one of the best places in the world to be. It is also home to St George's University, one of the best Medical and Veterinary Schools in the world.
Like countries and governments, hotel and resort developers also need new sources of funding, as conventional debt is not available for resort development in much of the Caribbean. Developers can leverage their equity by partnering with CBI investors to build new resorts, for which there is a strong demand in Grenada. The island currently has a desperate shortage of hotel rooms. Traditionally, the sale of real estate has provided funds, but since the credit crunch in 2008 this source of finance has been far less reliable. Grenada's CBI programme was launched to meet the growing demand for second citizenships, and to help fund the improvement of the island's infrastructure, including resort development. Expanding hotel room stock on the island will also reduce unemployment and expand Grenada's economy.
As a hotel brand, Kimpton® Hotels & Restaurants has put its name to the development. Kimpton is the world's largest boutique hotel operator and part of the InterContinental Hotels Group®. Its track record of achieving high occupancy and strong daily rates underpins rental returns and property values. Kimpton also has a performance test that requires it to meet certain operating benchmarks, which gives further protection to owners.
Kimpton Kawana Bay's rental pool structure is transparent: owners receive an annual share of revenue, rather than profit like most other leaseback structures. Returns from the rental pool more than cover running costs and provide a sensible return on investment. What's more, the rental pool structure and the returns ensure a smooth exit when investors want to realise their investment.
The outlook for Grenada's opportunities are plentiful. In September last year, CNN ranked Grand Anse Beach in the Top 30 of their 'World's 100 Best Beaches' review, describing it as possibly Grenada's finest family beach. "Foot-soothing sands, skin-comforting waters and soul-calming breezes," the report read. "Big enough to never get crowded and intimate enough to feel like your own."
Ensuring that the investment will end in positive returns, Grenada is currently displaying significant grits in terms of tourism. Grenada is showing solid growth in 2017, according to the latest data from the Grenada Tourism Authority. The country's stayover tourist arrivals were up five percent in the first half of 2017 compared to the same period in 2016, buoyed by a ten percent increase in arrivals from the US. Grenada also reported a nine percent increase in Canadian arrivals and a seven percent jump in arrivals from within the Caribbean. The country's tourism officials also reported that cruise projections for the upcoming season are 27 percent higher than the figures for last season.
In her Grenada Real Estate Market Report 2017, the owner of Century 21 Grenada Grenadines Real Estate, Paula LaTouche-Keller stated there was a pronounced improvement in Grenada's real estate market that began in late 2012. "In 2015 sales volumes surged by 71 percent. In 2016 the Grenada real estate market set a new high, with a nearly 23 percent increase over 2015." The report also stated that while there were disruptions in 2016 due to events such as Brexit, the market continued its year on year growth. "The projection for 2017 looks positive, with Grenada's real estate market well positioned for further increases in volumes and possible value appreciation."
The report also highlighted the success of Grenada's Citizenship by Investment programme. "It is also creating much needed jobs and improving the competitiveness of our real estate product," LaTouche-Keller wrote. "I am thrilled to see a real estate-tied programme having such a positive impact on the development of Grenada."
The investment outlook is extremely favourable, particularly given Grenada's geographical position outside of the hurricane belt, and the investment momentum that is occurring as a direct result of Grenada's very successful CBI programme. The future, for both Grenada and its CBI programme, is bright, with a beach view.