Recently the Investor Visa program observed decline in the EB5 investors from China. The news that the Chief Executive Mr. Peter Joseph of the Invest in the USA (IIUSA) is no loger associated with the organization has left the industry shocked. The industry is facing a huge drop in the number of Chinese applications for a US investor immigration programme. This is causing pain in sizeable American real estate projects as a source of affordable funding is declining.
The EB-5 Immigrant Investment Programme was created by the US Congress in 1990 to stimulate the growth of the economy through job creation and capital investment. Chinese investors have been the predominant source of capital, supplying as much as 85 to 90 per cent of the US$50 billion put up by global applicants each year.
But the heyday for the Chinese EB-5 market seems to be near ending. New applicants appear wary of the heightened uncertainties surrounding the programme as well as immigration laws in general under US President Donald Trump. A growing backlog of Chinese applicants has added to the dampened interest in the programme and led to a significant dip in available capital.
“The US$400 million deals that were regular a couple of years ago have now reduced to US$10 million. “Now a US$20 million deal is considered big as a result of China’s retrogression.” For Chinese applicants, the programme’s main attraction is not in the investment returns, but the pathway to seek the US permanent residency. The backlog, which now can take up to 10 years, has made the wait for the status exceptionally long. Before the current backlog, the wait time from completing the paperwork to becoming a green card holder was typically two years.
According to the current regulations, under the programme, a total of 10,000 green cards are available each year, with each applicant required to invest a minimum of US$500,000. This creates a unique problem for China because it is the only country where the number of applicants significantly surpasses the US Citizenship and Immigration Services’ annual green card quota.
Reports show that most of the EB-5 funding has gone to the construction of commercial and residential properties in the US. Developers favoured this type of capital because it’s more affordable and has a longer maturity than other available options. In return, investors receive permanent US resident status as long as each investment creates at least 10 American jobs.
In the 2012-13 fiscal year, the programme created about 174,000 jobs with a total investment of US$16.7 billion, according to a 2017 report by the US Department of Commerce.
“This is certainly a bad news that fewer Chinese investors are applying under the program because of the increasing backlogs. It is hurting the industry, which means it is also hurting US workers.Drastic changes aimed at easing the backlog and lending more certainty to the programme are needed to revive the market. But because of the US political climate, industry participants don’t expect such changes any time soon.
For more updates on the Investor Visa program and immigration, please visit www.emandilaw.com.