Trends in Investor
Diversification
by Reid Thomas
NES Financial interviewed 26 of
the EB-5 industry’s leading
experts and asked what
they foresaw as the
major challenges
and opportunities
facing the industry
in 2015. Their
overall responses
can be summarized
into four main
categories:
The biggest driver toward
global expansion today is retrogression for mainland China-born
applicants. Retrogression became a reality
for the first time in 2014, and its impact is not likely
to fade anytime soon. As the waiting line for Chinese investors
grows, it is no surprise that global expansion was cited as one
of EB-5’s top priorities.
Assuming that no change in legislation occurs that would
allow for more visas overall, seeking investors from countries
other than China may be the only opportunity available to
expand the market.
A second major driver of global expansion is competition.
Since 2010 there has been explosive growth in the number of
EB-5 regional centers approved by the United States Citizenship
and Immigration Services (USCIS). In a time where traditional
financing was not readily accessible, developers seeking alternative sources of capital flocked to these approved regional centers
and even sought to get their own regional centers approved.
As a result, the market became flooded with projects seeking
investors.
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Given that China has the most advanced infrastructure for
sourcing investors, it has traditionally been the obvious place for
issuers to market their projects. However, it is also the market
where competition for investors is the fiercest. To attract and
secure investors, issuers need to retain the services of migration
agents. Because there are a limited number of agents/brokers to
work with, supply and demand forces are in full swing, driving
the cost of sourcing capital this way higher and higher.
As cost and competition for investors in China rise, the
importance of developing networks in other countries becomes
paramount.
USCIS publishes EB-5 visa statistics quarterly but only
breaks them down by country on an annual basis. The most
recently published statistics shown below in Figure 1 reflect
FY2014 data. China is still by far the largest source of investors,
representing over 85 percent of program participants. South
Korea, Mexico, and Vietnam, while paling in comparison to
China with a combined market share of less than 5 percent,
make up the next largest markets.
EB5 INVESTORS MAGAZINE