EB5 Investors Magazine - Page 86

Continued from page 83 However, it is likely that the growing number of successfully admitted Latin American immigrants under EB-5 will spur a moderate increase in the flow of new applicants. Focus on the larger countries Scale is important to achieving the goals of an EB-5 marketing effort: Establishing a qualified network of immigration consultants, licensed local security dealers and agents will be time consuming. Furthermore, the high due diligence cost of becoming familiar with the immigration, taxation, regulatory and cultural aspects can only be justified in larger markets. Brazil, the largest country in Latin America with more than 200 million people and over 225,000 millionaires, is the most attractive country in Latin America for projects trying to raise EB-5 capital. In contrast with its fast GDP growth of 7.5 percent in 2010, Brazil’s GDP has contracted in three of the last four quarters. The looming challenges of recently re-elected president Dilma Rousseff, including a rising trade deficit, high inflation and a rise in extreme poverty, may result in new attempts to micromanage the economy. This economic uncertainty should produce a new wave of EB-5 applicants and perhaps reverse the overall decline of Brazilian emigration to the United States that began several years ago. Despite these trends, the migration of wealth from Brazil will continue to be dampened by the complexity and high costs of taking capital out of the country. Mexico, which has over 150,000 millionaires out of a population of 120 million, represents another large source for EB-5 candidates. With a more open economy that is highly linked to the United States, the motivation to emigrate may reflect safety concerns rather than an immediate preoccupation with the economic outlook. The recent events surrounding the disappearance and massacre of 43 students in Iguala, Guerrero, involving organized crime and members of the local government and police, has left President Enrique Pena Nieto with egg on his face. This tragedy, together with other recent, high-profile violent crimes, has provoked political discontent, including demonstrations and public demands for Nieto’s resignation. These events are a reminder of the frailty of the Mexican political system and present a strong argument for increased interest in the EB-5 program among wealthy Mexicans. Other countries with troubled economies, such as Argentina; unpredictable political environments, such as Venezuela; or growing and alarming crime rates, such as Honduras and Guatemala, are examples of ready audiences that can be very receptive to the prospect of immigrating to the United States. Conclusion Mass access to the wealthy in Latin America will remain limited and time consuming. Security concerns and periodically shifting economic conditions will continue to motivate the wealthy in the region to consider immigrating to the United States. By the same token, cultural and family ties, together with the economic success of many of these economies, will dampen the acceleration in the number of EB-5 applications. Factors such as a local presence or strong relationships with local partners, a good understanding of the local culture, a recognizable brand and the availability of EB-5 projects in cities well known to Latin Americans will be key factors in the success of any EB-5 capital raising initiative in the region. ★ Milton Chacon Milton Chacon is senior managing director at Newmark Grubb Knight Frank and a securities principal at BGC Partners. Mr. Chacon oversees Newmark’s operations in Latin America and it’s valuation and advisory division. Mr. Chacon is also spearheading NGKF’s efforts to help clients raise debt and equity in the EB-5 space. Latin America seeking Initiative EB5 Investors Magazine is actively to expand its attorney database to cover Central and South America. We are looking to list qualified Spanish and Portuguese speaking attorneys and consultants. Please contact us to be listed in our upcoming directory. Email info@eb5investors.com 84 EB5 INVESTORS MAGAZINE