Rumors swirl and real estate developers scramble for alternate funding.
umors continue to swirl that the popular EB-5 visa which guarantees a Green Card for individuals and their family members who invest $500,000 to a million dollars in federally approved projects, along with the creation of a minimum of 10 jobs, will be shut down next month by the US Govt.
The Street reported that since the 2008 crash, domestic capital has been scarce, sitting at just $3 billion in 2009 after hitting a whopping $230 billion in 2007. However, many real estate developers, with everyone from the World Trade Center’s Silverstein Properties to Extell Development, have used the EB-5 program to fund their projects.
Altogether, EB-5 investments hit close to $5 billion last year, with nearly 90% of investments coming from China.
Interestingly, the development coincided with the Chinese invasion of capital to the U.S. In recent years, Chinese investors have picked up iconic trophy assets at record prices with little-to-no regard for short-term yield, the Street reported.
“Despite its popularity, EB-5 financing could be seeing a slowdown amid concerns of fraud, not to mention rumors of Congress shutting it down next month. This is forcing developers to look elsewhere for cheap capital, namely Israeli bonds”, the report said.