Since the fiscal year 2008, when the number of applicants from China first surpassed that from South Korea, U.S. investment immigration has maintained a dominant position, with the number of applications reaching 80% of U.S. EB-5 applications by the fiscal year 2013. Over the years, investors have come to understand that U.S. investment immigration involves risks, primarily investment risks and employment risks. Therefore, how to choose a project has become a key concern for investors. WorldWay Immigration experts predict that in 2015, the following four categories of U.S. investment immigration will become a new normal of high demand:
First Category: EB-5 Projects with Strict Fund Release Supervision Conditions
Although U.S. immigration law stipulates that EB-5 investments are risky, the EB-5 program allows investors to secure their investment funds before the approval of the I-526 application. The specific approach is to establish an EB-5 fund supervision account, into which investors must deposit their investment funds before submitting their immigration application. The supervision agreement must stipulate that the investment funds can only be released after the investor's I-526 application is approved; if the I-526 application is denied, a full refund is required.
This is referred to as the "safety valve" of EB-5 funds, ensuring that investors' funds are under bank supervision until the I-526 is approved. Therefore, if a project does not have a bank supervision account, it is difficult for Chinese investors to recognize it. Incomplete supervision accounts are also no longer favored by investors. An incomplete account is one that is nominally established but allows the project party to access the investment funds before the investor's I-526 application is approved, often due to the project being overly reliant on EB-5 funds. Projects that are more dependent on EB-5 funds are typically those that are in greater financial need, thus posing higher risks. Undoubtedly, in the future, investors will prioritize EB-5 projects with secure and genuine supervision accounts.
Currently, the Pennsylvania Turnpike project, the New York Liberty Garden luxury apartment project, and the Cleveland Phase III EB-5 bond project, which are all strictly supervised EB-5 projects with stringent fund release conditions, are currently in high demand.
Second Category: Projects Pre-Approved by the U.S. Citizenship and Immigration Services
Since the U.S. Citizenship and Immigration Services (USCIS) implemented compliance policies on May 30 of last year, projects that have received pre-approval from USCIS have been highly sought after by investors. If a project receives pre-approval from USCIS at the I-924 stage, USCIS will adhere to the prior approval during the I-526 and I-829 stages. Clearly, projects that have already received pre-approval from USCIS significantly reduce the risks associated with immigration applications and shorten the document review time by USCIS. Especially in 2015, with the potential for backlogs and price increases, ensuring a quick and successful application will make pre-approved projects highly sought after.
Third Category: Genuine Government Projects with Direct Loans and Repayments from State Governments
In the past EB-5 market, investment immigration projects were primarily launched by small and medium-sized developers in the U.S. facing funding shortages. However, in recent years, it is noteworthy that certain state governments in the U.S. with high credit ratings have begun to use EB-5 financing to raise funds for public infrastructure projects such as roads and bridges. Immigration is a sensitive topic, and state governments are often reluctant to get involved. However, the successful approval of the 520 Bridge, a 100% state government project, has served as a model and inspiration for other state governments. Consequently, the Pennsylvania Turnpike project has received enthusiastic support since its launch, further encouraging various state governments.
Therefore, in 2015, more EB-5 projects operated and managed by state governments will enter the Chinese market. If a project merely leases state government land or receives certain tax or financial support from the state government, it is not considered a genuine government project. A genuine government project is one that is 100% owned, invested in, managed, operated, borrowed, and repaid by a U.S. state government. State governments have strong credibility and repayment capabilities, and their projects are subject to higher transparency and oversight from internal audit systems, as well as scrutiny from legislatures, opposition parties, and the media. As investors, if they must choose between lending money to private developers or state governments, it is likely that more investors will opt to lend to state governments. Some developers have complained: "It's so unfair; if we lend money to the state government, they promise to repay, and we get a green card for the whole family. Who would still want to lend money to us private developers?" Such complaints are likely to increase in 2015.
It is worth noting that the Pennsylvania Turnpike project is a government project where the government assumes repayment responsibility. The first phase of the Pennsylvania Turnpike project sold out within just one month. Currently, the second phase is making a strong comeback and remains in high demand, which is undoubtedly the best example.
Fourth Category: EB-5 Projects with Excellent Credit Ratings
A significant issue with U.S. investment immigration EB-5 projects is that investors are often not very familiar with the history and current status of the project parties or the investment process, and they make investment decisions based solely on the necessary English materials required by U.S. immigration law and the interpretations provided by immigration intermediaries. As a result, investors often find it challenging to make an objective assessment of the project's risks, which can be influenced by personal investment experience, risk preferences, and market promotions. However, if an EB-5 project has received credit ratings from the three major international rating agencies (S&P, Moody's, Fitch), it becomes much simpler. Investors can rely on the credit ratings to gain a more authoritative understanding of the project's risk level. The ratings from the three major international rating agencies (S&P, Moody's, Fitch) are based on professional expertise, databases, and methodologies to quantify the project's risk, and this evaluation system has matured and gained recognition from governments and investors worldwide.
Since the enactment of the U.S. investment immigration EB-5 program in 1990, there have been very few projects with credit ratings. Once a project receives an investment-grade credit rating, it often becomes highly sought after by investors. Currently, the reason the Pennsylvania Turnpike project has created a rare buying frenzy in China is that the project party, the Pennsylvania Turnpike Commission, holds an A+ credit rating, which exceeds the credit ratings of all Chinese state-owned banks and even the debt credit rating of the Japanese government. Therefore, it is not surprising that a buying frenzy has occurred. In the past, projects with high credit ratings were often concerned that USCIS would view them as low-risk and deny them, but the approval of the 520 Bridge project has proven that projects with high credit ratings can also comply with the EB-5 program. Thus, in 2015, EB-5 projects with investment-grade or higher credit ratings will be even more sought after.
