The report of the Visa Office 2018 has been published by the US Department of State revealing some interesting details about conditional green cards issued country to country with respect to the EB-5, (Employment Fifth preference) category. What is most telling (apart from the overall drastic jump since 2013) is the relative increase in visas issued to persons applying from outside the People’s Republic of China.
Two decades ago, the EB-5 visa was not a preferred option in grand scheme of things. However, as the Chinese economy went from strength to strength particularly around 2007 and 2008 more applicants from the nation applied for EB-5 visas. From 2006 to 2013 there was a consistent increase in the number of Chinese applicants.
Percent of total EB-5 recipients not born in China
The growth ceased as the category hit its quota of 10,000 issues by year. Hitting the ceiling meant that since 2014, there have been few opportunities for additional numbers. What can be seen in the graph, is that there has been a relative drop in the number of visas for Chinese applicants. Demand has not fallen for persons born in China but applicants from other nations are filling the quota. There are both more people applying from more nations than ever before.
Marketing EB-5 outside of China
For persons marketing EB-5 visas the trend is important as it shows that there is broad demand for places outside of China, and also it shows that there could be future limitations on the number of successful applicants from the nation. Much may depend on the origin of future applicants. If they are from a few nations, then country-quotas may prevent crowding. But if the applicants come from a range of nations it may make it even harder for Chinese investors to achieve their goals.
Naturally, there is a need to be able to digest the EB-r visa reports and discern implications for clients. However, there are a few assumptions and facts on the data that need to be pointed out.
The report of the Visa Office highlights the green card number for permanent residence (conditional). To determine investor status, one must factor time period from investment to issue of visa (which is typically less than five years based on processing time (I-526) and investor origin as well as the visa number per investor (typically three).
The report only shows the demand up to the given cap (7% per country). The implication is that there is more demand than is shown; For persons from nations where there is a lot of demand such demand is not accurately reflected, only the number of visas issued for that group is. For example, there has historically been a lot of applications from Vietnam but only the number for the 7% is shown.
China made up nearly half of the total visas as persons from this nation had some of the oldest applications after undersubscribed country demand was satisfied. However, India had less than the possible 7% in FY2018, which meant that the 585 visas represented for that nation is in fact the number of applicants (increasingly the number from India increased 300% in a year). Also see this article about retrogression for EB-5 applicants from India.
Nonetheless, the surge may be more related to the significant processing times and reflect high interest in investment two years ago. A log of I-526 country by country and priority (published by USCIS in October) can provide a better reflection of demand in recent years.
Many industry experts anticipated more visas being issued for investment (EB-5), however, it seems the expectation has not eventuated. There does seem to be more regional center investments occurring with the percentage increasing from 91% to 93% and to 94% from 2016, 2017 to 2018 respectively. Much has also been said on the need to better understand the backlog in relation to investment visas.
Some experts have estimated that the investment of Indian applicants from EB-5 visas would have been almost $500 million, and moreover that the amount would reach $1 billion and $2 billion in 2019 and 2020 respectively. The prediction suffers perhaps from some oversimplification in that even if the amount of investment increased dramatically, such as to permit well over 12,000 applications per annum, there still may remain a limit of approximately 700 issued visas per year.
|Visas for Direct Investors + Family||Visas for RC Investors + Family|
|$1M not in TEA||$500K in TEA||$1M not in TEA||$500K in TEA|
|5th Employ. Creation||5th Target Employ Areas||Regional Pilot Program||Regional Target Areas||5th total||% of total||Total change from 2017|
|China Mainland Born||102||86||13||4441||4642||48,1%||-2925|
|China Taiwan Born||7||20||425||452||4,7%||264|
|Hong Kong S.A.R.||4||15||181||200||2,1%||119|
|Great Britain & Territories||1||11||72||84||0,9%||2|
|France & Territories||4||4||66||74||0,8%||39|
|United Arab Emirates||7||47||54||0,6%||42|
|All other countries||23||21||351||395||4,1%||38|
The reality is that if people want the estimates in the previous EB-5 investor map and table to eventuate there is a strong need to challenge some of the existing barriers. Where there could be successful markets, unfortunately to a large extent they are backlogs of nightmare proportions.
There is a need to lobby elected representatives for more equitable visa allocations. Without such, the only other areas for development would be changing the way promoters raise investment amounts or alternatively for the minimum investment to the drastically increased on a per person level.