2017 was a year of rapid change for the immigration sector, with varying policies across different countries creating significant uncertainty for overseas immigration. As we enter 2018, what trends will the overseas immigration market display? Worldway Immigration Group has forecasted immigration trends for two consecutive years, garnering significant attention from the industry and investors alike each year. Based on the development of the immigration industry and the evolution of global immigration policies in 2017, the expert team at Worldway Immigration Group has conducted careful research and analysis, monitored global policy dynamics, and consulted with immigration experts and investors in relevant countries to release their third authoritative report: "Five Major Immigration Trends of 2018," to share with the industry and investors.
1. The United States initiates its largest immigration reform in 30 years; immigration policies set to tighten unprecedentedly
Following the U.S. tax reform, the Trump administration will launch a comprehensive reform of U.S. immigration law, the most significant in 30 years. Disagreements remain between the Republican and Democratic parties on this issue. Influenced by the "America First" policy and acting within its executive authority, the White House will strictly control L-1 and H-1 visas, intensify investigations into fraudulent activities related to EB-1C, EB-3, and other visas, and strengthen efforts to combat illegal immigration. However, the Republican Party may compromise with the Democratic Party on the protection of undocumented minors in exchange for support on other issues. Overall, in 2018, as the U.S. initiates this major legislative reform, a consensus between the two parties remains uncertain, and under these circumstances, U.S. immigration policy may tighten to an unprecedented degree.
2. The new EB-5 bill will take effect, significantly impacting investment immigration
After ten extensions, the new EB-5 bill is expected to take effect in 2018, having a major impact on investment immigration. Once the new bill becomes effective, the threshold for EB-5 investment will be raised significantly, creating a "crowding-out effect" that will push a portion of the middle class out of the immigration market. Furthermore, due to the implementation of U.S. tax cuts, investment immigration is expected to shift toward high-end projects. Thirdly, the visa backlog will become more severe in 2018, and the number of applicants is expected to decrease substantially. Under these circumstances, projects with shortened backlogs will become popular in 2018 and dominate the Chinese EB-5 market, while projects with insufficient equity capital or heavy reliance on EB-5 financing will be more prone to failure. Meanwhile, applicants with young children or those without dependents, who are less affected by backlogs, will be more inclined to choose projects that have already been approved by USCIS and feature well-capitalized developers, simple investment structures, and primary repayment guarantees for EB-5 funds.
3. Combining private equity with immigration investment will become a new characteristic of cross-border asset allocation
Due to severe backlogs, enthusiasm for EB-5 investment is waning, and U.S.-based project parties have begun seeking private equity in the Chinese market to offset the shortfall in EB-5 financing. At the same time, the wave of global capital returning to the U.S. triggered by U.S. tax cuts is accelerating the trend of denominating global asset allocations in U.S. dollars, thereby stimulating Chinese investor interest in U.S. investments. The "waterfall" distribution model, common in the U.S. private equity market, will gradually become familiar to Chinese investors, and EB-5 projects that combine private equity with EB-5 financing will become more popular in China. Immigration investment in the U.S. will become more rational; the housing needs of immigrant investors will shift more toward residential use, and investors will begin to pivot from pure real estate speculation toward U.S. Real Estate Investment Trusts (REITs), with highly liquid open-ended real estate funds expected to be particularly popular.
4. The proportion of U.S. investment immigration is declining, and the diversification of immigration investment will become more pronounced
As the number of U.S. investment immigration applicants decreases, Canadian investment immigration will become a focal point for investors. However, due to limited quotas, Canada's capacity to divert immigration flow is limited. Conversely, European investment immigration programs without quota restrictions will attract more investors, making Europe a significant outlet. In particular, the Greek real estate investment program, with its high cost-performance ratio and low threshold, will be a new hotspot in 2018. Meanwhile, with the easing of the EU refugee crisis and economic recovery, the value of EU passports is being rediscovered; the Cyprus investment program, which grants EU citizenship upon property purchase, will continue to gain popularity.
5. China will implement the CRS (Common Reporting Standard) for tax information exchange for the first time in 2018, making low-tax immigration programs highly popular
In 2018, China will implement the Common Reporting Standard (CRS) for financial account tax information exchange for the first time, leading to unprecedented increases in global tax transparency. Under such circumstances, low-tax immigration programs will become highly popular. Considerations regarding tax systems will become a key factor influencing immigration investment trends. Tax and business planning will emerge as major motivations for immigration, secondary only to children's education. Commonwealth countries in the Caribbean and South Pacific regions share characteristics such as simple tax systems, no tax on overseas income, and no inheritance or value-added taxes, which will attract more investors to choose these destinations from a business and tax perspective. In particular, investment-based citizenship programs in countries like Saint Lucia and Dominica, which have relatively low investment costs and high value, will become more popular. Due to its unique national conditions, Saint Lucia is set to become the Commonwealth country with the fastest growth in applicants in 2018.
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