The demand to purchase property in Malta and Cyprus by Russians has increased by 40% and the majority are cash-for-passport applicants, according to international real estate agency Knight Frank.
Around 70% of all transactions were from buyers mainly focused on residential real estate with the goal of obtaining citizenship, the company’s head of Department of Foreign Real Estate and Private Investment Marina Shalaeva said.
The sale of Maltese passports to Russian citizens has raised the concern of the European Commission, who has questioned the source of their wealth.
In a recent interview with the Financial Times, EU Justice Commissioner Věra Jourová said she was alarmed at the way Russians were buying passports in Malta.
“It is a big concern when a Russian citizen who has worked his whole life in middle or senior management — where salaries aren’t very high — suddenly has the money to buy citizenship in Malta,” the commissioner said.
In autumn, the commission will publish a report likely to fault government schemes for not carrying out enough due diligence on applicants and the sources of their wealth.
Since the Maltese passport scheme started in 2014, more than 700 investors brought €590 million to Malta. The Maltese government has begun to publish the names of individuals granted citizenship.
In 2016, the list included Boris Mints, the Russian billionaire owner of investment company O1 Group, and Arkady Volozh, the founder of Yandex, Russia’s biggest search engine.
In Malta, an individual can gain citizenship in return for a €650,000 contribution to the country’s development fund and the purchase or lease of property, as well as investments of at least €150,000 in stocks and bonds.
Family members can be added for an additional fee of €25,000 to €50,000 per person.
Knight Frank’s Shalaeva pointed out that investors are interested in entering into projects with local developers, adding that this year the number of transactions in commercial real estate significantly increased, including hotels and apart-hotels.
Since January 2018, in Cyprus, 5,400 real estate sales were made – 25.5% more compared to the same period last year. Half of these were foreigners.