US developers feel pinch as Chinese investors pull back from EB-5 programme that offers green card as a reward
A US programme rewards wealthy immigrants with green cards in exchange for investment in real estate projects, but long-time Chinese interest is waning
A big drop in Chinese applications for a US investor immigration programme is causing pain in sizeable American real estate projects as a source of affordable funding dries up.
The EB-5 Immigrant Investment Programme was created by the US Congress in 1990 to stimulate the economy through job creation and capital investment. Chinese investors have in recent years been the predominant source of capital, supplying as much as 85 to 90 per cent of the US$50 billion put up by global applicants each year.
But the heyday for the Chinese EB-5 market seems to be ending as new applicants appear wary of heightened uncertainties surrounding the programme as well as immigration laws in general under US President Donald Trump. A growing backlog of Chinese applicants has further dampened interest in the programme and led to a significant dip in available capital.
“The US$400 million deals we were doing regularly a couple of years ago now become US$10 million,” Clem Turner, an EB-5 immigration lawyer for New York-based Barst Mukamel & Kliener, said at the 2018 NYC Real Estate Expo last week. “Now a US$20 million deal is considered big as a result of China’s retrogression.”
For Chinese applicants, the programme’s main attraction is not in the investment returns, but the green card. The backlog, which now can take up to 10 years, has made the wait for the status exceptionally long.
Under the programme, a total of 10,000 green cards are available each year, with each applicant required to invest a minimum of US$500,000. This creates a unique problem for China because it is the only country where the number of applicants significantly surpasses the US Citizenship and Immigration Services’ annual green card quota.
The programme was put in the spotlight last summer when Kushner Companies, the real estate firm owned by the family of Jared Kushner, Trump’s son-in-law and senior adviser, marketed one of its New Jersey projects to a group of Chinese investors while promoting its connection to the president.