Comment: On the ground in top EB5 markets

On the ground in top EB5 markets

ILW Publisher, Sam Udani, has just concluded the first leg of his tour of the top 5 EB5 countries. He met with 51 agents in India, Korea, Taiwan and Vietnam. He met with most of these agents in their own offices, in one-on-one meetings having in-depth conversations with each. The agents he met represent 50% of the combined capacity of Vietnam, Korea and Taiwan, and 20% of the EB5 capacity of the more fragmented Indian market. This email is based on his report from the ground on the EB5 ecosystems in 4 out of the top 5 EB5 markets in the world. Here are his four observations from on the ground:

1. EB5 agent ecosystems are devastated with as many as 50% of the old EB5 ecosystem out of EB5 or out of business. This is due partly due to covid; and partly due to a 3-year shutdown of EB5 (caused successively by the November 2019 regulation, litigation, the RIA statute and more litigation). One large agent said they lost half their staff in spite of paying full salaries to all staff with no income coming in simply because the staff were bored with having nothing to do.
2. Historically, the 5 countries of China, India, Vietnam, Korea and Taiwan have accounted for 90% of EB5 demand in the last 5 years, the last 10 years, the last 15 years and likely the next 5 years (the EB5 world therefore is a very small world, just 5 countries). EB5 projects are taking different tacks with the top 5 EB5 markets:

• EB5 projects are flocking to China
• They are abandoning India, since projects believe that Indian investors ask too many questions
• Korea and Taiwan are being ignored since they are tiny compared to China
• Vietnam is being viewed as a backup to China

3. EB5 agents reported that the change from $500k to $800k is making countries other than America more competitive. However, almost every agent confessed that America remains the #1 brand their clients desire immigrating to.
4. Risk assessment of projects is dramatically different between the Confucian countries of Vietnam, Korea and Taiwan on the one hand versus India on the other. Agents and investors in Vietnam, Korea and Taiwan have no real understanding of risk. They substitute “Bigger is Better” as the formula of risk assessment, thus failing to assess true risk. Indians on the other hand, in spite of having one of the lowest literacy rates in the world, have the highest rate of financial literacy in the world–higher than even Western countries and of course much higher than the Far East.

Stay tuned for further reports by our Publisher for his visit to the largest of all EB5 markets, China.

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