The increasing trend of direct EB-5 investment
By Anayat Durrani
With the failure to extend the EB-5 regional center program past June 30, direct investment will likely be the only option for investors since that program is permanent, without risk to expire. But direct investment has been a popular option long before the regional center program lapse and will continue to be so, according to industry experts.
“Over the past decade our firm has been privileged to assist scores of direct EB-5 investors to obtain lawful permanent residency in the United States,” says Mark I. Davies, Esq., global managing partner and founder at Davies & Associates. “For several of our clients, the increasing I-526 and visa issuance adjudication delays have made the regional center program less attractive compared to the direct investment in the United States.”
Some investors may prefer the direct investment route, which requires investors to invest in a commercial enterprise, as either a sole proprietorship, partnership or joint venture, and create at least 10 jobs lasting for at least two years. After the EB-5 investment amounts returned to 2019’s levels last week, investors can now invest $500,000 if the commercial enterprise is located in a targeted employment area, or $1 million if not. Direct investment allows investors to operate independently and control their investment.
Why EB-5’s direct investment option is attractive to investors
“The EB-5 industry has definitely been in a state of, in my opinion, unprecedented flux since the increases in the minimum investment thresholds and changes to the TEA rules in November, 2019,” says Lauren A. Cohen, Esq., international legal and real estate expert, e-Council Global.
However, Cohen says the changes made in 2019 had a positive impact on the direct investment side of the EB-5 industry.
“The volume of applications for EB-5 direct investments has increased, and certainly there is a major trend toward EB-5 as a next step following success in the E2 process,” says Cohen.“ There is no current threat of dismantling the EB-5 direct investment program and it seems to be considered the "safer" path to pursue for many seeking permanent residency.”
Trends in the EB-5 direct investment industry
Cohen says the direct investment industry trends she has seen include investments into many tech-oriented and infrastructure projects as well as heavy construction. She says businesses that offer opportunities for expansion and are in growing demand continue to be popular, such as hospitality and tech.
“We have witnessed a resurgence in interest in the direct EB-5 program, again particularly as a next step in the visa process following an E2 Treaty Investor visa, as the pandemic is finally winding down and opportunities to invest across borders are opening up,” Cohen says.
With the lapse in the EB-5 Regional Center program, direct investment will continue to be a viable option available to clients, industry experts say.
“Given recent events, this raises the intriguing possibility that the direct EB-5 program continues at $500,000 post June 2021 and will no doubt lead to a surge in direct EB-5 filings,” says Davies.