Crystal Lagoon in Malta, where foreign property owners can qualify for citizenship.

The unexpected outcome of the Brexit vote has made the world feel like a more uncertain and unstable place, according to Sandra Woest, senior manager at the South African office of Henley & Partners, a global firm specialising in residence and citizenship planning.

“It highlights for South Africans that unforeseen change can affect family and business, and so a long-term sustainability strategy becomes even more important. This is why many wealthy South Africans are looking for ways to diversify their investments and build up a citizenship portfolio,” says Woest.

She says one of the ways they are doing this is to invest in property or businesses in certain countries in the European Union (EU).

“Buying a property is a hedge against future losses in the value of the rand, since your rand investment becomes an asset you could later dispose of in the stronger euro. And if you buy the property in an EU state that also offers residence or citizenship-by-investment programmes, you may acquire full EU citizenship rights.

“The EU rights are really valuable: travel is far easier, there is the possibility of greater educational opportunities for your children at leading European institutions, and greater freedom of settlement should your children wish to work elsewhere.”

Three EU countries offer such programmes – Portugal, Malta and Cyprus – and all involve the investment of funds in fixed property.

Portugal’s Golden Visa Programme allows property owners the benefits of residence rights, which may include a different lifestyle in another country, and the insurance of a second home in a safe haven in the event of political instability in your home country. Malta and Cyprus also have programmes that provide for the acquisition of citizenship.

Woest says: “The weakness in the European property market following the financial crisis of 2008 is now largely over. Portugal and Malta, in particular, have shown steady recovery since 2012. This is clear from the many new property developments under construction in both countries, as well as the levels of activity among local buyers and the popularity of apartments among foreign buyers.

“In Malta, in particular, a shortage of high-end property in recent months means that when new developments launch, they quickly sell off plan.

“The economic future looks particularly rosy for Malta, where major development is happening – it is undergoing a so-called Dubaiification process, with significant investment coming in. All this bodes well for the future of the property market.”

Woest says the potential risk of buying property in these countries is limited in that investors aren’t compelled to retain property in return for the residence or citizenship rights. The Cyprus programme, for instance, requires that the investment be held for at least three years, after which it can be liquidated.

“This flexibility is useful,” says Woest, “since it allows you to select whatever investment looks most attractive once the three-year period is up. In addition, if that requirement is met, the citizenship rights remain for life and can be passed on to your children.

“All in all, buying property in Europe may be the way to open doors if you are keen to acquire a second passport and the benefits that go with that,” says Woest.

This article was first published in SA Property news on 10 August 2016