On Mar 27 2015 by H. Ronald Klasko

China EB-5 Market: 2015 (Part 1) – Factors Affecting the Market

Having returned from another trip to China and having met with many of the top migration agents in China, I would again like to share my thoughts in this blog on the state of the China market for EB 5 investors at the present time. In my next blog, I will discuss hot topics and new developments regarding EB-5 projects and agents in China.

2015 is an unusually pivotal year for EB-5. Many events are expected to occur in 2015 that could significantly impact the market. Here is how it looks to me based on my many meetings with agents:

  • The single biggest issue affecting EB-5 in 2015 is clearly the impending quota retrogression. Some agents view the quota retrogression as a reason to step back until the impact becomes clear. More agents realize that it is important to get their investors to establish their place in line as soon as possible and have reported that the quota backlog is not a drag on the market.
  • The impact on children is having multiple effects. Some investors are filing sooner while their children are age 18 or younger. Some investors are gifting the money to the child and having the child be the investor. Other investors are making two investments – one for the parents and one for the child.
  • Some agents expressed concern about the expiration of the regional center program on September 30, 2015. Most agents are aware that the program has been extended many times and that the chances of extension again in 2015 are extremely good. Mostly, this is not a drag on the market.
  • There are rumors in China that the minimum investment amount will increase from $500,000 to $800,000. Most agents with whom I spoke are not too concerned with this. If anything, it would be a reason for investors to expedite their investments. Most agents believe that investors would be willing and able to invest an increased amount if necessary.
  • I discussed with a number of agents the impact of the availability of ten year multiple entry B 1/B-2 visas for Chinese nationals. Although some thought there could be an impact on EB-5 and perhaps was an impact on EB-5 in late 2014, in the end it appears to have very little impact on investors who would otherwise be interested in EB-5 investments.
  • Two items of expected bad news in 2015 are the SEC investigation of major regional centers and immigration attorneys and the expected release of the U.S. GAO report on EB-5. Of course, no one knows for sure what the impact of these two events will be, but the feeling is that, on top of a lot of negative publicity from major media sources, there could be a negative impact on investors.
  • The closing of the Canadian program has resulted in many “orphan” EB-5 investors. This has had a positive effect on the EB-5 market.
  • The Chinese real estate market has experienced a decline, especially in the four largest cities. Reactions among the agents are mixed as to the impact that this is having and will have on EB-5 investors.
  • The Chinese government has instituted an “anti-corruption campaign”. Although I had heard that this could have an impact on Chinese EB-5 investment, all agents denied that this would lead to fewer EB-5 investors.

In summary, there are signs that 2015 could be a tumultuous year for EB-5. However, the consensus is that, as long as the quota backlog does not become too long, the Chinese EB-5 market will remain a healthy one.

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