The
EB-5 program has caught the attention of the United
States as recent negative stories in the U.S. have surfaced over the
past
weeks. The US Homeland
Security Inspector General and FBI ongoing investigation into USCIS and
director
Alejandro Mayorkas has also caught national attention by Chinese
emigration industry and investors. Also, an EB-5
project recently laid off 250 workers and filed Chapter 11 after
successfully raising capital in South Korea
and China over the years. There should be a growing concern by the EB-5
community that the
Chinese authority is further investigating EB-5 projects marketed in
China. The Chinese authority already requested Chinese emigration
agents to report their EB-5 activities since SEC's probe over Chicago
convention center project early this year. Many Chinese emigration
agencies are also switching their service to European real estate
investment markets. Any substantial loss of EB-5 capital, loss of
immigration residency and EB-5
fraud in the United States could cause a reaction by the Chinese
government to
permanently ban or postpone the EB-5 program.
What would happen if the EB-5 program is banned in China? The Chinese investors market currently makes up roughly 80% of the EB-5 investors market as the remaining 20% coming from South Korea, Middle Eastern countries and Latin America. Competition would become intense as nearly 100 EB-5 projects would begin fighting for the remaining 20% of EB-5 investors. The direct result of the Chinese ban on EB-5 would cause many projects to fail in raising EB-5 capital. There simply would not be enough investors to invest in every EB-5 project that is currently being marketed across the world.
Another major impact would be marketing costs of EB-5 projects would skyrocket. China has a very well-established emigration industry which has been around for decades. South Korea is one of the few other countries to have this emigration system but there simply are not enough investors in South Korea to fill China’s shoes. Developing new markets in locations such as Dubai, Latin America, South Africa, India, etc. would take years of education and a great amount of investment. The cheap alternative financing called EB-5 wouldn’t be so cheap anymore turning real estate developers back to conventional financing.
There would be a major impact to the regional centers, real estate developers and businesses if the EB-5 program was to be banned in China. EB-5 project developers must move forward quickly with marketing their projects in case China was to postpone or ban the EB-5 program or develop an alternative marketing strategies in other countries. For more information about risk control and management over EB-5 program, please contact Tyler McKay at 217-899-6661.
What would happen if the EB-5 program is banned in China? The Chinese investors market currently makes up roughly 80% of the EB-5 investors market as the remaining 20% coming from South Korea, Middle Eastern countries and Latin America. Competition would become intense as nearly 100 EB-5 projects would begin fighting for the remaining 20% of EB-5 investors. The direct result of the Chinese ban on EB-5 would cause many projects to fail in raising EB-5 capital. There simply would not be enough investors to invest in every EB-5 project that is currently being marketed across the world.
Another major impact would be marketing costs of EB-5 projects would skyrocket. China has a very well-established emigration industry which has been around for decades. South Korea is one of the few other countries to have this emigration system but there simply are not enough investors in South Korea to fill China’s shoes. Developing new markets in locations such as Dubai, Latin America, South Africa, India, etc. would take years of education and a great amount of investment. The cheap alternative financing called EB-5 wouldn’t be so cheap anymore turning real estate developers back to conventional financing.
There would be a major impact to the regional centers, real estate developers and businesses if the EB-5 program was to be banned in China. EB-5 project developers must move forward quickly with marketing their projects in case China was to postpone or ban the EB-5 program or develop an alternative marketing strategies in other countries. For more information about risk control and management over EB-5 program, please contact Tyler McKay at 217-899-6661.
