FY2018 EB-5 Visas by Country
The US Department of State has published Report of the Visa Office 2018 Table V Part 3, which gives a tally of visas (conditional green cards) issued by country for the Employment Fifth preference (EB-5) in FY2018. The major story in the FY2018 report is the increase in EB-5 visas issued to applicants born outside of mainland China.
EB-5 in the early 2000s used relatively few visa numbers overall, and only really took off with the increase of EB-5 interest from/in China after 2008. Then China-born investors drove growth and claimed a majority of visas until the total number of EB-5 visas possible to issue hit its ceiling: the annual quota of about 10,000 visas. Since that ceiling was reached in FY2014, there’s been no room for EB-5 to grow — China and the rest of the world just have to jockey each other for the available annual visas. The decreasing number of EB-5 visas issued to China-born applicants since 2014 does not primarily reflect decreasing demand from China (China still dominates the backlog), but increasing demand from other countries that decrease the number of visas available to China.
FY2018 data shows a marked increase not only in total number of applicants from outside China, but also in the number of countries supplying those applicants, and in the number of countries with a relatively large number of applicants each. EB-5 marketers care about this, because it helps identify the range and depth of market potential outside of China. Past China-born investors care about this, because their future wait times depend on the nature of incoming non-China demand (with best case scenario being demand concentrated in a few countries that will become blocked by the per-country cap, and worst case being large total demand spread out over many countries).
We want to read EB-5 visa reports and draw conclusions about demand for EB-5 investment opportunities. So a few reminders to qualify such conclusions:
- The Visa Office report indicates the number of green cards issued for conditional permanent residence. To track visa numbers back to investor detail, it’s necessary to factor in the time between investment and visa issuance (about 1 to 5 years in 2018 depending on investor origin and I-526 processing time), and the number of visas per investor (about 3 on average).
- The Visa Office report only directly reflects demand for countries that take significantly less than 700 visas (ie less than the 7% per-country cap). For countries that exceed the cap, the number of visas issued is not the number they demanded, but the number they could get. In FY2018, Vietnam got 7% of total EB-5 visas pursuant to the per-country cap, regardless of how many Vietnamese were ready to apply, and China got 48% of visas because that’s what was left for the oldest applications after demand from undersubscribed countries was satisfied. On the other hand, India remained under the per-country cap in FY18, so its 585 visas directly reflect the number of FY18 applicants (more than threefold increase from the previous year). But keep in mind, lengthy I-526 processing times mean that the FY18 surge in India visa applications reflects a surge in investments from India that happened 1-2 years ago. For a better sense of recent demand trends, see the log of pending I-526 by country and priority date that USCIS published in October 2018.
I’ve expected to see an increasing number of visas associated with direct EB-5 investments, but that hasn’t been true so far. Regional center investments accounted for 94% of EB-5 visas issued in FY2018, as compared with 93% in FY2017 and 91% in FY2016.
For reference, here is my post on FY2017 EB-5 Visas by Country
I haven’t had time yet to update and recalculate my backlog calculation spreadsheet. But I will add one table here as follow-up to ILW’s article EB-5 Industry Misunderstands Retrogression (12/31/2018). The article estimates that “India generated close to $500 million in EB5 investments in 2018, and it is on track to generate $1 Billion in 2019 and $2 Billion in 2020. Indian EB-5 is a $3 Billion opportunity in the coming two years.” The article goes on to rightly correct misconceptions about how EB-5 visa allocation works, but omits one important calculation: what happens if one puts $3 billion dollars (12,000+ visa applicants) from one country in line to a gate that can only issue about 700 visas annually.
If we want to make Row A in that table a reality, and how wonderful that would be, then we have to deal with the constraints that turn successful markets into backlog tragedies. Let’s put the pressure on Congress for visa relief. Otherwise, ethical promoters will have no option but to reduce the amount of investment they try to raise, or to support proposals dramatically increasing the minimum investment per investor.