Social housing, nursing homes and even whiskey distilleries have each claimed a share of more than €1 billion that wealthy non-EU citizens have pumped into the Republic over the last nine years in return for the right to live here.
Department of Justice figures show that in 2020, more than 260 people, most of them Chinese, pledged €185.6 million to businesses and charities through the State’s Immigrant Investor Programme (IIP). That brought the total raised from the cash-for-visas scheme to €1.01 billion since the government launched it in 2012, in one of several efforts to attract money to a recession-hit economy.
The IIP operates simply: non-EU citizens pledge a minimum of €1 million to a business, or donate €400,000 to charity, and in return they earn the right to live here along with their families. They do not get citizenship or a passport, just residency. After 24 months, they can renew this for a further three years, once the cash has been used for the purpose earmarked. After the first five years, they can renew for another five and so on.
To qualify in the first place, applicants must demonstrate that their net worth is at least €2 million and be able to show the source of their wealth.
Chinese citizens outnumber all other investors by far. Last year they accounted for 254 of the total. Between 2012 and the end of 2019, 1,068 backers came from the far eastern giant, from a total of 1,162. The US came a distant second, with 27 investors in all.
Most observers say that this is not unusual. Many countries, including the UK and plenty of EU states, have similar schemes. All of them find that China accounts for the bulk of applicants.
Georg Chmiel, co-founder and executive chairman of Singapore-based property firm Juwai IQI Group, says the opportunity to educate their children abroad, particularly in English-speaking countries, drives most investors.
“Thousands and thousands of Chinese apply for investment visas every year,” he says. “Many feel the Chinese system of education is too focused on rote memorisation and also too cut-throat competitive.” He adds that they believe their children will fare better at international schools, where the environment is more supportive.
Along with an English-speaking population and reputable universities – Chmiel highlights Trinity – the Republic ticks a few other boxes. It is an EU member with close links to the UK; has a high-profile technology industry, and is seen as modern, safe and stable.
"Chinese parents don't worry about their university-age children walking home on the streets of Ireland alone," Chmiel says.
Thousands applying for immigrant visas every year means this is big business in China. There are 800 firms in Shanghai that offer advice services, nearly 200 in Beijing and 400 in Shenzhen, according to Juwai. This is how Chinese citizens learn of a scheme on a small island half way around the world.
Irish organisations dealing with Chinese investors echo Chmiel’s point about education.
"It's the English language and good education system with good opportunities for third level," says David Hall of charity Icare Housing, which raised €13.8 million in donations in February 2019. He says that IIP allows not just investors but their families to live here too.
Hall says the investors are mostly people with their own businesses who made money as China expanded rapidly in recent decades. His clients include someone with a small – by Chinese standards – road contracting business who has probably laid more kilometres of tarmac than criss-cross the entire Republic.
Another Irish organisation recently had a property developer applicant who described herself on the forms as a “housewife”, but only because she regarded her day job as secondary to raising her family.
Chmiel says that many Chinese became “moderately wealthy” from owning their own homes and one or two other properties, which allowed them to benefit from the country’s rapid urbanisation. He also notes that investors will generally have some overseas income, which allows them to get around Chinese exchange controls that cap the amount of foreign currency they can buy at US$50,000 annually.
Irrespective of where they get the cash, applicants must show that it was acquired legitimately. The department has strict rules governing proof of funds and anti-money laundering safeguards that investors must satisfy before its officials approve them. That stretches to an Interpol report on each individual. They must also have their own health insurance, and their residency rights do not entitle them to Irish welfare payments.
The department is very cautious, very careful, very meticulous
The scheme’s rules also take political exposure – where someone is in a position of power or influence, and so could potentially be bribed – into account. However, the department says that no applicant has been refused on this basis alone.
Hall says officials are careful when it comes to approving both projects for funding through the scheme and each individual investor. “The department is very cautious, very careful, very meticulous,” he says. “They don’t care how urgent you think your scheme is, they go through everything methodically.”
The department itself says that it has refused applicants for various reasons, including that they did not meet the net-worth requirements or the projects in which they were investing did not “align with the programme’s objectives”. Those aims prioritise activities that the Government regards as strategically important, including social housing and healthcare.
These account for around half of all the money raised. By the end of 2019, social housing accounted for €249 million of the €826 million introduced to the Republic through the IIP at that point. The department calculated that this was committed to 3,500 social homes. Another €165 million was pledged to nursing homes.
Bartra, the property business run by developer Richard Barrett, formerly a partner in Treasury Holdings with Johnny Ronan, has used the programme to raise cash for both. Earlier this year, the company confirmed that it had aided more than 200 Chinese families to take up residency here.
Donors to charities obviously do not get their cash returned, hence the lower threshold to qualify
It is building 62 social homes in Stoneybatter and Poplar Row in Dublin, with plans for other sites in the capital, including Kilmainham and Navan Road, that will ultimately lead to the construction of 1,000 dwellings. Similarly, its healthcare division has built nursing homes, also in and around Dublin, providing 500 bedrooms.
Bartra acted as an intermediary for Tallaght Hospital when it raised €1.6 million in charitable donations to pay for robotic surgery equipment and for Beaumont Hospital when it received €2 million towards a new operating theatre. The company stresses it made no money from either transaction.
Hall’s Icare organisation chose the charity route, raising €13.8 million from Chinese donors who gave €400,000 each. So far it has spent €7.1 million and is preparing to outlay another €3 million later this month, amassing 40 to 50 homes, which will go into its mortgage-to-rent scheme. He is planning a second round, and possibly a third.
Donors to charities obviously do not get their cash returned, hence the lower threshold to qualify. Investors in commercial projects must leave the money there for a minimum of three years, although individual businesses may require it for longer. At that point, it can be returned, with a small premium in some cases, depending on the venture, but the cash is also subject to normal business risk, meaning some, or all of it, could be lost.
The Peter McVerry Trust has raised €1.6 million in charitable donations through the IIP, which it has used to buy apartments for homeless people. National University Ireland Galway also obtained €1.6 million this way to aid efforts to increase access to third level education. Distillery Nephin Whiskey received €1.5 million in commercial investment several years ago and founder Paul Davis said in February that it intended seeking more funding through the programme.
All this cash has come from China, but US investors may yet start playing a bigger role, particularly if President Joe Biden rolls back some of his predecessor's tax changes, which generally favoured wealthy individuals. One Irish agent says that there was growing interest in the scheme here before Covid-19 struck last year.
He adds that one well-known investment brokerage there had been planning an event for high net worth individuals to talk specifically about the Irish IIP early in 2020, but the virus outbreak forced it to cancel. However, that organisation is now seeing renewed interest from across the Atlantic.
“US investors are comfortable with dealing with Ireland, they know Ireland, they have a good working knowledge of it,” he says. “Unlike Indian or Chinese investors, they don’t need to come here to see where their money is being invested.”
Along with tax policy, Brexit too could steer more US money into the Republic and away from the UK scheme, as transatlantic investors see EU membership as important, particularly if they are putting money into businesses likely to trade within the bloc.
In addition Brexit could also increase the money flowing here through the scheme from China. Juwai IQI recently predicted it could increase Chinese IIP investment in the Republic by about €60 million this year.
“An extra 50 or 100 applicants from China means a one-third or larger expansion in total participation in Ireland’s investment visa programme,” says Chmiel.