Thursday, October 29, 2015
Strong US Dollar impacts EB-5 Market
The US Dollar is rising the fastest in 40 years and continues to gain strength amongst all major currencies. Europe and Japan are in stimulus mode, Brazil has entered a recession and China’s growing economy is slowing down. China’s economy is trying to make the difficult transition from one based on investment to one based on domestic consumption. They have devalued the Chinese Yuan to a four year low and the stock market in China recently dropped 30% over a 3 week period in June. The increased value of the dollar is impacting the EB-5 Program's largest investor market- China. We have heard reports from China that EB-5 investors are having a more difficult time finding their $500,000 investment capital due to the recent economic hardships.
This comes at a time when the US Congress is considering raising the investment minimum to $800,000 and $1,200,000. Most emigration professionals we talk to do believe raising investment minimum will greatly impact EB-5 Program. The average EB-5 investor who sells 1 or 2 properties to invest in EB-5 will now have to sell 3 or 4 properties. There has not been any open discussion about grandfathering or allowing a grace period before new EB-5 legislation becomes law, but we hope they are favorable to the EB-5 industry. With the rising dollar, Chinese Yuan devaluing and more EB-5 projects than ever before, it has become intensely competitive for US projects to find EB-5 capital in China. The EB-5 Industry will have to keep monitoring the currency strength of US Dollar and Chinese Yuan and its impact on EB-5 investors.