Given that the 2020 fiscal year has just ended on September 30, 2020, it is a good time to reflect on the last fiscal year and how the EB-5 program has been affected. 2020 has been an unprecedented year, with the global COVID-19 pandemic, the U.S. presidential election, and many other factors that could all affect the EB-5 market. Analyzing these market trends can help determine what is on the horizon for the EB-5 Immigrant Investor Program in the years to come.
Global Interest in the EB-5 Program
Throughout 2020, the EB-5 program has gained popularity in many countries, while activity from others has diminished. China, for example, normally leads in EB-5 activity, but its EB-5 activity has decreased during 2020. In China’s place, Vietnam has stepped up, becoming one of the major players in the EB-5 market over the last couple of years. Due to the COVID-19 pandemic, investor activity from Vietnam was low over the second half of FY2020, but activity is beginning to pick back up.
The EB-5 market is also gaining popularity in South Korea and Taiwan. EB-5 activity is expected to increase in the following years from both of these East Asian markets. However, the most significant growth in interest in the EB-5 program has been from Russia and other Commonwealth of Independent States countries.
The Effects of New EB-5 Regulations
There were also important changes made to EB-5 regulations in FY2020. The required investment amount was increased on November 21, 2019, and has led to a smaller number of investors. This increased investment amount, along with stricter eligibility requirements, has led to investors to conduct more due diligence and seek out EB-5 investments with lower financial and immigration risk.
The new Modernization Rule also took effect this fiscal year, creating more rigorous requirements for target employment area (TEA) designation. Many projects that used to have TEA designation no longer qualify, which has led to a higher percentage of EB-5 investors investing in rural projects.
COVID-19 Impacts on the EB-5 Program
The COVID-19 pandemic has had drastic impacts on the EB-5 program. As a result of the pandemic, U.S. embassies and consulates temporarily shut down, leaving thousands of foreign-based EB-5 applicants unable to complete their visa applications and interviews. Additionally, low immigration numbers led to the financial instability of United States Citizenship and Immigration Services (USCIS). But despite all the negative impacts, there were many ways that the EB-5 program also benefited from the COVID-19 pandemic, including an increase in the available EB-5 visas for FY2021.
It is also projected that the pandemic will lead to an increase in EB-5 interest as foreign nationals begin to reconsider their current country of residency. This global crisis has shown many foreign nationals the benefits and advantages to permanently relocating to the United States.
Due to the COVID-19 pandemic and the new EB-5 regulations, investors are likely to be more selective with their investments and more careful with their capital. Prospective investors will likely seek out EB-5 projects with more security, a detailed plan to meet the EB-5 requirements, and new commercial enterprises (NCEs) that understand the impacts of COVID-19 in their industry.
Competition from Similar Immigration Programs
Due to some of the challenges that the EB-5 program has faced, some foreign nationals are looking into similar immigration programs in countries like Canada and New Zealand. The presidential election could also be a determining factor in how foreign nationals feel about relocating to the United States. A change in administration could create a more immigration-friendly image of the United States, which would make prospective immigrants feel more welcomed.
All in all, 2020 has been an unpredictable year that has brought many changes to the EB-5 program and U.S. immigration as a whole. Those planning an EB5 investment should consider analyzing the market trends to gain an understanding of what may come in FY2021. This could help them predict any possible backlogs, changes in processing times, or even changes in EB-5 requirements. Despite the challenges the program has faced, it is still one of the fastest and easiest ways for foreign nationals obtain permanent resident status in the United States.