The number of investor visas granted to Chinese nationals seeking to enter the UK has skyrocketed to 357 in the year to 30 September compared with 178 in the previous 12-month period, while the number of Russian people using this route has also surged.

(Updated to add law firm reaction.)

The number of investor visas granted to Chinese nationals seeking to enter the UK has skyrocketed to 357 in the year to 30 September compared with 178 in the previous 12-month period, while the number of Russian people using this route has also surged.

The UK government is slated to raise the minimum investment sum for a Tier 1 Visa, as they are called, to £2 million from £1 million ($1.516 million).

The figures, according to a report by law firm Pinsent Masons, show that Chinese nationals now account for 43 per cent of all investor visas issued by the UK in the last 12 months, the largest share of any country and up by 10 per cent five years before. Meanwhile, the UK also increased the number of investor visas granted to Russian nationals, up by 57 per cent in the last year, from 117 in 2013 to 184 this year. That figure may reflect desire by Russians to get out of the country following last year’s dramatic escalation of tensions between the West and Russia over the latter’s annexation of Crimea, and alleged support for pro-Russian forces in Ukraine.

The increased interest in investing shown by international HNW people in entering the UK highlights the shift away from investment in some emerging markets, such as China, after a prolonged period of rapid growth. Asian wealthy people have been among the most prominent investors in luxury London residential and commercial properties, for example, in recent years.

The UK government has been advised to adjust the visa regime to encourage wealthy investors and entrepreneurs to put money into the “real economy”; the current system has, so advisors say, tended to simply lead to buying of government bonds and other liquid securities.

It may also be hoped that a change to the visa system to encourage greater investment in business could draw some of the political sting out of the issue. The trend of rich foreigners buying London properties, for example, has become controversial at a time of rising house prices. (Foreign investors are said to own about 7 per cent of Greater London residential property in 2013/2014, according to Savills, although a far higher percentage of such non-UK persons have been buying newly-built luxury homes, drawing sometimes hostile press coverage.)

Pinsent Masons said some research it recently commissioned estimates that Chinese annual investment flow in the UK is set to rise to £30 billion per year in 2025. Over half of this investment will be directed at infrastructure and real estate.

Recent measures to raise the minimum investment sum to £2 million for a Tier 1 visa will not have a significantly detrimental impact on inflows of HNW individuals from countries such as China, the law firm said.  

European appeal

There is strong demand for such investment visa programmes in different countries, and not just to enter the UK, Mark Lanning, director of immigration in the Hong Kong office of Withers, said in a note about the figures.  

“It seems that virtually every investment visa program in the world has high China demand; as high as 80-90 per cent in the US, Canada, Australia, and Hong Kong.  In fact, that demand can sometimes become unsustainable.”

“For example, Canada suspended its investment visa program last year.  The US market surpassed its quota for the first time in 2014.  To capture rising demand, the Australian government recently announced the world's most expensive investment visa programme - the Premium Investor Visa -- at A$15 million.  Today (14 January) the Hong Kong Chief Executive suspended Hong Kong's Capital Entrant Investment Scheme because of excessive Mainland China demand,” he continued.

“So European investment visa options - although more expensive than other jurisdictions - are perhaps becoming even more popular because not as many Chinese have applied for that market,” he added.