By Marie Ekberg Padilla
The EB-5 industry has more than $4.5 billion in the pipeline of new qualified projects, according to Signature Bank, which has been heavily involved in the industry for the last decade.
“And the number is going up,” said Robert Sloposky, senior vice president and group director at Signature Bank, one of the largest banks for EB-5. “The reason the pipeline is large is that everyone is at the starting line. Regional Centers went to market at the same time.”
The large pipeline was caused based on the lapse of the EB-5 program, he said.
“This is unusual but there is a reason for it,” he said adding that projects used to come to market on a steady flow before the lapse.
The abundance of projects will have a beneficial impact on investors.
“Investors have more choice since there are more available projects at the same time,” Sloposky said. “However, this can slow down investments but this will work itself out.”
Where are EB-5 investments coming from post RIA?
Indian investors top the list of countries of origin for EB-5 investors since the new RIA legislation took effect, Sloposky said. It has also become more than 12% more expensive for an Indian native to buy American dollars so in reality, an Indian investor is paying $100,000 more than others to invest in a rural project, he said.
China and Taiwan are ranked next, followed by South Korea, Vietnam and Singapore. All countries are seeing the impact of their currency against the dollar, including Vietnamese investors who are paying nearly 3% more than before to invest.
“What that tells us is that the Vietnam currency holds up better than the Indian currency,” he said.
Ranked as number seven is Canada, followed by Brazil, Columbia and Russia.
“For the first time ever we are also seeing money come in from Germany for EB-5,” Sloposky said. “That is because the German economy is imploding. The war in Ukraine has disrupted a lot of commodities.”
Will the future of EB-5 investments change?
Sloposky says he is working with the government to create two new asset classes for EB-5, including quantum technology and rare earth elements.
“I am attempting to get them qualified through the 2% set aside EB-5 category for infrastructure,” he said. “That would be very interesting for the EB-5 community.”
The movement comes after President Biden has classified infrastructure as a “national interest” item.
“You need quantum cyber security to protect our infrastructure,” Sloposky said. “The world is changing very quickly in terms of technology. We’ll see changes in the next three years that we haven’t seen in the last 40.”
If these proposed changes get approved, it could be beneficial for EB-5 investors.
“They would have an expedited process,” he said. “This is a great opportunity for people to invest in these new forms of technology. EB-5 has traditionally been real estate and mezzanine debt focused. This would be a new asset class.”
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