Chinese Investors: China EB-5 Market Update

With the growing China EB-5 market, an increasing number of Chinese investors have stakes in new commercial enterprise developments in the U.S. reducing cost burdens on U.S. developers, boosting the U.S. economy, and creating jobs for qualified U.S. workers.

The increasing number of Chinese investors in the EB-5 program means a number of trends and issues in the market.

The most popular cities Chinese investors are investing in:

1. New York City
2. Los Angeles
3. San Francisco
4. Seattle
5. Miami

The most popular types of projects for EB-5 Chinese investors:

1. Hotels
2. Healthcare related projects like Hospitals
3. Multi-family residency projects (with government support)
4. Condominiums

Growing market for Chinese developers:

With the growing EB-5 market, many Chinese developers are entering the field and developing projects in the U.S. There’s a split between Chinese investors who prefer to work with Chinese developers who they may feel more comfortable working with and Chinese investors who prefer to work with U.S. developers, perhaps for their knowledge and experience.

Issues with escrow:

In a 2-year timeline EB-5 Chinese investors have to prove their EB-5 project will meet certain expectations, including job creation, means that they don’t have the luxury to wait the 14 months or longer that it takes for escrow to process. Instead they are opting for alternate methods of releasing funding into their EB-5 projects.

Choosing projects that have already begun development:

Many Chinese agents preferring that the investment money not be released into the projects until after they have already started construction. This is for two reasons. One it adds a level of assurance that the project they have chosen will go through until completion. Two, it shows that Chinese investors and agents prefer to choose projects that don’t depend on EB-5 funding in order for them to develop to completion.

Return on EB-5 investments:

An overwhelming concern for EB-5 Chinese investors is that the project development goes through in order to receive unconditional lawful permanent residence in the U.S. Chinese investors and agents have mixed concern about a return on their investment. Some feel it’s not a major concern to receive a return on their investment as long as they and their family receives green cards.