The EB-5 Visa program
allows foreigners to acquire a green card when they invest in a qualified EB-5
business and create ten full jobs for US residents or citizens. EB-5 cash has
been utilized to subsidize the advancement of many significant projects. EB-5
investment, regularly organized much the same as a mezzanine credit, can offer
financing to different businesses at low rates, compared to a traditional
mezzanine loan. Be that as it may, lately, it has been tormented with issues,
including misrepresentation and Visa retrogression from Vietnam, and China. The
current waiting period for Chinese investors is around 14 years. Those
components have quieted enthusiasm for the program from investors from China
and prompted many EB-5 providers to start promoting the program in other
countries around the world. On the other hand, many of the money lenders have
pulled back because of vulnerability encompassing the novel coronavirus, and
developers hoping to construct new development ventures are left with few
choices for financing, EB-5 being one of them. However, with the latest
regulations being passed in November of 2019, and with congress just recently
passing a bill to continue the EB-5 Regional Centers program, the program is
moving towards offering more security to investors in terms of fraud as well as
assure investors the program is long term and will continue to be a favorable
way of contributing to the US economy.
A glimpse of the 2008 Recession
After the last
downturn- The Recession of 2008, developers and investors went to the
government EB-5 program providers for modest financing to finance new real
estate project developments.
David Finkelstein, the
Founder and CEO of American Immigration group-NYRC and one of the architects of
the EB-5 industry as we know it, says that the EB-5 program turned out to be a
lifesaver for real estate developers looking for investment, helping the
country bounce back from the crisis in a short span of time and found a lot of
interested investors mainly in China. About 86% of all EB-5 investments in 2008
until 2017 came from mainland China.
Presently, with an end
goal to counter the significant disturbance in the economy due to the outbreak
of the coronavirus pandemic, the U.S. government is thinking about
significantly increasing the size of the program as a component of a more extensive
improvement measure. The potential proposition, whenever executed, could bring
about billions of dollars streaming into new ventures.
The investor pool has
changed due to the changes in the program that went into effect in November
2019, which increased the minimum investment amount, and changed the definition
of the TEA. Many investors were discouraged by the price increase but for many
others this seems to be bringing the US citizenship by investment program at
par with other Citizenship by Investment programs around the world. The truth
is that the EB-5 program never had an increase since 1990’s when it first
started until 2019.
EB-5 and the Pandemic
around the world reacted to the news of the global pandemic. Some of the worst
hit markets that experienced a big drop in stock indexes were Colombia, Brazil,
and Russia. Investors around the world panicked and sold stocks which resulted
in the S&P 500 falling 31% in a month’s time from late February through
late March. Countries around the world have seen a contraction in their
economies and experienced lower GDP’s.
result, investors with liquid capital who are looking for more valuable opportunities
have shifted their focus on a more traditional asset, real estate. According to
Gallup’s annual Economy and Finance survey conducted April 1 through 14th, real
estate’s popularity has surged. It has been the favored investment since 2013
and one of the top investment choices since 2016.
real estate investing boost may be positive news for the EB-5 industry, it’s
too soon to measure the pandemic’s full impact, however, it is not too early
for sophisticated EB-5 investors to understand which economies, and which asset
classes are most stable, resilient, and likely to survive this pandemic and
other future economic downturns.
immigration Group- NYRC believes that the U.S. remains the go-to market for
investors. Both, investors looking for value creation and investors looking for
another citizenship option. Investors have historically allocated capital into
US real estate when times were tough.
factors are currently driving foreign high net worth individuals to invest in
the EB-5 program during the coronavirus pandemic:
of political instability and civil unrest as poverty hits new heights in their
own countries and,
of losing their financial capital due to inflation and economic downturn in
their own countries.
These two factors,
reinforced by positive government support to businesses and individuals like
those of the United States, have encouraged investors to pursue safer grounds
where they can sustain and create wealth as well as and secure a better and
safer future for their children.