By Anayat Durrani
Since Congress’ creation of the EB-5 Immigrant Investor Program to promote economic growth in the U.S. through foreign investment, the program has served as a viable pathway to American green cards for foreign investors and their families.
While it has since experienced some bumps along the way and a pandemic, the program continues full speed ahead with EB-5 volumes holding strong.
“The EB5 Reform and Integrity Act (RIA) has provided a welcome resurgence to the EB-5 industry,” says Connor Irish, co-founder of PRXY, which provides end-to-end fund administration powered by blockchain.
Increasing number of EB-5 projects and higher offering sizes
The RIA brought stricter oversight and transparency measures for the EB-5 process. Irish says the company built its software platform in response to the new law to help clients have the best tools to navigate the new world of EB-5.
“The accelerated performance of our own business is a clear signal of the clear pent-up demand for the program, which now continues to be realized as an impact of the new regulations,” says Irish.
He adds that with the movement the company has seen in 2023 alone, the metrics recorded so far “are a strong indicator of the trajectory of the program and we are excited for what the future holds for all EB-5 stakeholders.”
PRXY’s 2023 metrics as of August show 46 new projects onboarded in 2023. The total EB-5 expenditure recorded on the PRXY platform are approximately $525M.
The August 2023 metrics show that the largest EB-5 offering is $255M and the smallest is $2.4M. The numbers show an aggregated 2023 EB-5 offering size on the PRXY platform at $1.8B and an average 2023 EB-5 offering size of $41.1M. The aggregated 2023 total project cost is $4.4B as of Aug. 1.
New projects entering the market on the PRXY platform in Q3 2023 include 26 new projects identified in the Q3 pipeline. The total aggregated offering size of the 2023 PRXY pipeline is $2.7B, and the average offering size is $35M. The total 2023 project cost including pending pipeline projects is $6.1B.
RIA shows positive impact on EB-5 while investor markets are changing
Jill Jones, general counsel at JTC, who has been directly involved in more than 600 EB-5 development projects, says while some feared that the lack of guidelines or clarity following the enactment of the RIA would pause the industry, it has in fact not been the case.
“The volume of new EB-5 projects has doubled year over year since the RIA was enacted. It seems industry players are tired of waiting,” says Jones.
She says one interesting result can be seen in the change in where investors are coming from. Compared with investor volume between 2022 and 2023, the number of investors from China in active projects has increased by more than 400%, Jones adds. Meanwhile, investors from South Korea have dropped by 84%, and investors from Vietnam have decreased by 63%. She attributes it likely due to the RIA’s introduction of reserved visas that allow new Chinese investors to cut to the front of the line.
“This has the dual effect of spurring Chinese investment from investors who had been deterred by protracted wait times while also making it possible for developers to take advantage of the well-developed EB-5 networks in China, rather than spending time educating the less robust markets,” says Jones.
However, she notes that while the leaderboard has shifted, the same combination of a handful of countries still dominates the industry.
“China, South Korea, Vietnam, and India still represent over 75% of the investors in active projects,” says Jones.
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