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Has the Pandemic caused a surge in EB-5 Visa applications? Through the Lens of American Immigration Group-NYRC

American 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.

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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

Markets 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.

As a 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.

While the 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.

American 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.

Two major factors are currently driving foreign high net worth individuals to invest in the EB-5 program during the coronavirus pandemic:

  1. Fear of political instability and civil unrest as poverty hits new heights in their own countries and,
  2. Fear 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.

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