Demand For U.S. Investment Visas From Rich South Africans Doubles
The number of wealthy South Africans looking to attain U.S. investment visas more than doubled from 2014 to 2015, with many considering the benefits and advantages of having an exit plan during economic and politically unstable times.
Recently released data revealed that South African demand for US EB-5 visas, which enable investors in American companies to obtain a green card, increased noticeably since 2014.
A U.S. EB-5 visa can be attained by investing at least $1 million (or $500,000 for projects in a “targeted employment zone”) and creating more than 10 full-time jobs in the U.S. within two years.
The $500,000 at current exchange rates would require a Rand millionaire to make a R6.66 million investment.
Administered by the United States Citizenship and Immigration Services (USCIS), the EB-5 program approves and designates Regional Centers, such as the LCR Overseas Regional Center, to attract foreign investment into the U.S.
Since the program was created in 1990, thousands of immigrants have received permanent U.S. residency, creating tens of thousands of jobs at no cost to the U.S. taxpayer.
Increased interest in U.S. Investment visas
Doug van der Merwe of LCR Capital, a private equity investment firm that assists high-net-worth individuals in acquiring the visas through investments, said that data from South Africa showed great interest in the EB-5 opportunity.
Applications in 2014 amounted to 14 in total, with an increase to 40 during 2015 demonstrating the growing demand for the investment visas from South Africa, according to IOL.
“We think it’s likely that number will have doubled again in 2016, based on the increased interest we have recently experienced at LCR,” Van der Merwe said in reference to the 40 applications during 2015.
“Political developments often drive demand in South Africa, and we are experiencing requests for information daily, rather than weekly, since the credit ratings downgrade. Previously, there was a spike in interest after Nenegate and during the Fees Must Fall protests,” he revealed.
South Africa was recently downgraded to junk status by both S&P Global Ratings and Fitch Ratings after a surprise cabinet reshuffle by President Jacob Zuma at the end of March, which included the removal of respected finance minister, Pravin Gordhan.
South Africa is home to around 40,400 dollar millionaires with the ability to launch applications for the program, with combined wealth holdings of US$171 billion between them, according to The South Africa 2017 Wealth Report.
Van der Merwe explained that LCR had offered South African investors the opportunity to invest in the Dunkin Donuts franchise through a private equity fund during 2016, and that the hugely popular opportunity was now closed to further investment.
He did, however, mention that a new investment opportunity was open to interested South Africans, at the Miami Surf Club Hotel.
“LCR is currently offering the opportunity to invest in the iconic Miami Surf Club hotel, a 1930s refurbishment whose developers are seeking $100 million in working capital from foreigners, which also qualifies investors for EB-5 visas, due to its guaranteed job-creation prospects,” Van der Merwe added.
The timeline for a capital return in the EB-5 visa program is five years, but the investor is expected to secure a green card after around 18 months, according to the LCR website.
The Trump administration is in the process of reviewing the EB-5 program, which was due to expire in April, with congress recently extending the immigration initiative until May 5 when they passed a continuing resolution to extend federal funding for a week, giving them time to review and extend the program for a longer term.
The program is likely to be reauthorized under a short-term budget bill, separate from large-scale immigration reforms that lobbyists and the Trump administration are currently discussing, according to the Washington Post.