The number of Russians seeking to obtain an investment visa to the United States has grown
According to Gazeta.Ru, the number of Russians wishing to obtain an EB-5 investment visa to the United States has significantly increased in the first quarter of this year. These data are provided by W1 Evans. Preliminary estimates indicate that the number of applications for investment visas will increase by 62.5% by the end of the year. This surge in activity is linked to the fact that from September 1 of this year, the minimum investment amount for obtaining an EB-5 investment visa will be increased by $300,000 and will amount to $800,000. The increase in visa cost and exchange rate differences may influence the decision of many Russian investors who were considering emigration to the United States in favor of relocating their own businesses to America, W1 Evans analysts note.
In April-June 2015, about 15,000 applications were submitted. As of the end of March 2016, 355 more applications were submitted than in the fourth quarter of 2015. Moreover, the fourth quarter of 2015 and the first quarter of 2016 are two consecutive reporting periods in which more than 6,000 registration applications for this program were submitted for the first time.
“Due to the increase in cost in the near future, according to W1 Evans forecasts, we may see another surge in activity. We expect growth in the number of Russian investors among EB-5 visa applicants in the next two quarters of 2016,” comments Anna Levitova, managing partner of W1 Evans.
Immigrant Investor, or EB-5, is a visa that is currently issued for investments from $500,000 in projects certified for the EB-5 program. Although this visa type was designed to support regions not receiving sufficient investment, today there are EB-5 projects in New York, Florida, and other places that do not suffer from a lack of foreign investment. After five years, investors and their family members become eligible for a green card.
Vadim Verin, managing director of Global MCom, also noted that interest in business emigration to the United States has been growing recently, but in his view, this is due not so much to the expected increase in investment size as to overall political instability. “Since the beginning of last year, the number of inquiries has grown significantly. Moreover, the main surges begin immediately after alarming news. For example, someone among the country's top officials says something that makes you think, and the very next day calls start coming in, people begin looking for a backup airfield,” the expert notes.
“If earlier the vast majority of our clients were exclusively investors, now many are considering moving to the United States for permanent residence. Russian assets have become cheaper or no longer yield the same income, and finding new occupations and building a business in the United States is easier than elsewhere,” Anna Levitova agrees with him.
At the same time, Verin believes that, as a rule, people who apply for an investor visa do not plan immediate emigration. “Here we are usually talking simply about expanding opportunities for oneself and family members, creating a backup airfield. People who apply for an investment visa usually live in two or three countries,” he says.
Recall that the EB-5 investment visa category was adopted in 1990 by the U.S. Congress. The purpose of adoption was to create additional jobs through an influx of foreign capital into so-called targeted employment areas. About 10,000 EB-5 visas are issued in the United States each year (plus family members). For the second consecutive year, Russians are among the top six countries in terms of the number of investor visa applications. Russia is surpassed by China, which receives the largest share of EB-5 visas, Vietnam, South Korea, India (in 2015), and Iran (in 2014).
“Such investments are unlikely to bring additional income, but they are usually returned within five years, plus the investor and his family members receive a green card. The United States in return gets free money, investments in the economy,” says Verin. He clarified that although U.S. authorities promise that the investments will be returned, the investor acts at his own risk and may lose money in an unfavorable scenario. “You need to carefully choose the investment object. It is most advantageous to invest in real estate, hotel construction,” the expert believes.
Levitova reported that for many, the goal is not so much obtaining a green card as creating a new business. “New York attracts those who are not ready to become retirees or passive investors, and those who have ambitions to realize themselves in a new market. Besides investors who buy income-generating real estate or invest in development, today we see the desire of Russian businesses to enter the local market. We receive many interesting requests from Russian retail, restaurants, and other types of entrepreneurial activity focused on the local audience,” says Levitova.
It should be noted that, according to experts, investors are selected quite carefully. “The main limitation: the money invested must be clean. To participate in the program, you need to fill out a 13-question application. They are interested in things such as education, any legal issues, and the source of income. The tax return is checked,” Verin says.
Nevertheless, according to him, rejections are rare because the investor visa is obtained by “quite reasonable people.”