REPOST: Foreign Investment In U.S Real Estate

Foreign investments in U.S. commercial real estate has achieved record numbers and big headlines. China as well as the the other foreign countries were reported to have invested billion in the U.S. over the last 24 months. This article has the details.

In Mid-March of 2014, foreign direct investment in real estate sector in the United States reached up to approximately $9 billion, with several billion-dollar agreements still in process. Since the Chinese economy has gradually slackened and the Canadian market has become more saturated in the real estate cycle, foreign investors are turning their attention to the U.S. market now more than ever. Dan Fasulo, the Managing Director of Real Capital Analytics, stated that there has been an enormous inflow of investment in the commercial real estate sector over the last 24 months. In 2013 the cumulative inflow from foreign investment in direct commercial real estate was close to $40 billion according to the Commercial Real Estate Development Association.

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According to Jones Lang LaSalle (JLL), an investment firm, 10% of all capital real estate investment comes from foreign investors. The major source of investments in 2013 is coming from Canadian real estate buyers using pension funds. The Wells Fargo Center, one of the tallest buildings in downtown Seattle, was acquired by Canadian pension fund group Caisse de Depot et Placement du Quebec’s real estate unit Ivanhoe Cambridge in June 2013. Closing in on Canada’s exploits, other vital investor companies from China, Australia, United Kingdom, Norway, Singapore and South Korea have also been busy with their own efforts to penetrate the American market. According to reports by Deloitte, Chinese investors climbed up into being a significant contributor in the U.S. by investing $5.8 billion in a 15-month period. Many foreign companies are seeking partnership opportunities to explore high-profile deals, like the Chines real estate subsidiary Cindat Capital Management Co. that partnered with Chicago based Zeller Realty Group to purchase a 65-storied office tower in the area for around $304 million in March of this year. The most attractive cities for such investors are New York, Brooklyn, San Francisco, Houston, Florida and Los Angeles because of large quantity of existing commercial property. There are other countries like the UAE, Italy, France, and Switzerland whose prospective rate of growth has been increased tremendously and are considering making a move in the U.S.

The large number of foreign investors entering the U.S. real estate scene has not only impacted the country’s overall economic growth but has also had a singular effect on both U.S. citizens and foreign immigrants. While there is no direct relation between FDI and housing for students, FDI is having a positive impact on the communities by empowering strong networking among them which is supporting the international students housing. Real estate owned by foreign direct investors are more willing to extend their support to foreign students by finding them apartments to rent, or even sub-letting their homes. In some cases people sharing the same nationality tend to support these non-immigrant students by acting as their financial guarantor, which makes it easy for students to find renting options without having to suffer from unreasonable conditions.

The good news is, in the United States,care available for both citizens and lawful permanent or non-permanent residents. Many loan providing programs, such as Fannie Mae, Freddie Mac and the FHA, offer similar rules and the verification requirements are also under the same mortgage programs at comparable rates and terms. There are no extra costs, fees or even high interest rates for a non-immigrant borrower. This made the demand for houses soar to even higher levels than expected. According latest data from the National Association of Realtors, by the end of 2013 foreign buyers had increased to $68.3 billion of single-family homes, which is about 7% of total population in the U.S.

As a result of high demand for houses among foreign buyers, the prices have been increasing rapidly, with an estimated rise by about 10.9% nationwide. According to Jonathan Miller, president of appraisal firm Miller Samuel, the average one-bedroom apartment rents for more than $2,600 a month in Brooklyn, NY. This rise in house price has had an undercutting impact in the U.S real estate industry as a whole. There are many non-immigrants, especially students, who have resorted to sharing homes and even rooms. Due to increase of house rents, whereas the individual income levels remain constant, sharing homes is becoming a growing trend in many cities especially in metro areas. Not only are the international students, but also many locals are now pairing up to share houses to reduce their monthly expenses. Moreover due to high housing prices, many young-adults return under their parents’ roofs as they are trying to conserve enough money to pay for other accommodations. In addition to that, increased cost of housing is also affecting the businesses in not so positive way, especially the small and median enterprises as well as startups. Small businesses produced 46 percent of the private GDP in U.S but increase in house rent made the business difficult to operate eventually having a negative impact in the economy as a whole.

As an EB-5 visa specialist, Shalom Segelman has been promoting the Immigrant Investor program to investors around the world. To know more about the EB-5 program, visit this Facebook page.

A look at the average processing time for an EB-5 visa application

Image Source: economictimes.com

Foreign investors awaiting the approval of their EB-5 visa application often ask how long the processing time is. It is a pretty well-known "secret" that this program is a faster route to gaining a permanent resident visa than the standard procedure of being endorsed by a citizen or having to live in the country for at least 10 years.

Image Source: nesfinancial.com


This is because the requirements for the EB-5 program are pretty straightforward, since they involve funding and investment. In general, for an EB-5 application to be approved, the foreign national has to invest at least $500,000 in a targeted employment area or $1 million in another industry. The investor must also be able to supply a minimum of 10 jobs to Americans, which will help boost the local economy. There are other requirements needed, but these two are the most important.


Processing time for the application depends on which regional center the foreign investor applies in. The center is determined by where the investor intends to set up his or her business. The times may also vary depending on the type of industry the investor will fund, and the type of petition applied for (permanent or temporary).

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Typically, the entire application process should only take around from two to six months, with six months considered a fairly lengthy time. If the application has already reached this mark, it is highly suggested that the foreign investor consult with an EB-5 specialist or contact an authority that can check the current status of the petition.


Learn more about the EB-5 program by following this Shalom Segelman Twitter account.

REPOST: India moves to fast-track US investment ahead of Obama visit

The Indian government announced that it had formed a panel that will expedite investment proposals from U.S.-based companies to help American investors conduct business smoothly in the country. This article from the Fortune.com has the details.

Modi wants U.S. investors to make Indian cities smart and green. | Image Source: fortune.com

Delhi looks to build on trade breakthrough.

India’s government announced plans to make U.S. investment in the country easier, as part of its broader plans to break down the country’s notorious bureaucratic obstacles to business.

The New Delhi government said it will form a new panel to fast-track investment proposals from the U.S. to “identify bottlenecks faced by the U.S. investors…and address them in consultation with all other agencies and state governments concerned.”

The announcement appears to build on a largely successful visit to Washington earlier this year by Prime Minister Narendra Modi, in which Modi promised to make his country an attractive destination for inward investment, especially in manufacturing. Like many Indian politicians, Modi is frustrated at the degree to which India’s poor infrastructure and bureaucracy have led foreign investors to favor China over the years.

Modi’s visit had paved the way for a much bigger breakthrough in economic relations last month, when Washington dropped its objections to India’s food subsidy policies, unblocking a major deal on boosting global trade that was all but agreed last year in Bali by the World Trade Organization.

It may be a moot point whether what India needs is yet another inter-departmental panel aimed at “helping” inward investment.

However, Wednesday’s announcement is consistent with Modi’s plans to create a network of 100 “smart cities” across the sub-continent in the next six years, singling out the priority of promoting “green, advanced and smart technologies by U.S. companies in India.”

The announcement comes a month before President Barack Obama is due to visit India.

Separately, Modi’s government also announced Wednesday a general easing of the rules for foreign investment in its construction sector, Reuters reported.

Under the new rules, foreign companies will be allowed to invest in medium-sized developments with a minimum-built area of 20,000 square meters, as opposed to a current minimum of 50,000. The minimum capital investment has also been halved to $5 million, Reuters quoted the government’s statement as saying.

In addition, investors will be able to exit projects either on completion, or after the development of essential related infrastructure such as roads, street lighting and water supply. Currently, investors aren’t allowed to repatriate profits for two years.

The new rules will only go some of the way to making investment easier, as the approval for land development projects generally lies with state and municipal governments.

Shalom Segelman is an EB-5 visa specialist who assists foreign nationals gain permanent U.S. residency in exchange for job-creating investments in the country. Follow this Twitter account for more updates.

REPOST: US Rule of Law Drives Foreign Investors

Foreign investors sees U.S. real estate as a good investment. Know the reason behind this from the article below:

“The US has one of the best transparency indices; the rule of law is enforced here, so foreign investors have greater confidence in their ownership position.” | Image Source: globest.com

NEWPORT BEACH, CA—It’s no secret that foreign investors are bullish on US real estate. But which foreign investors are having the biggest impact on our market, and why is real estate here so attractive to them? Kerry Vandell, director of the Center for Real Estate at UC Irvine, will be speaking about these and other subjects at this week’s California Association of Realtors conference in Los Angeles, “The Real Estate Summit: Partnering for Change,” along with other representatives for leading real estate research centers at California’s top universities. We caught up with Vandell to discuss the issues he’ll be broaching at the conference.

GlobeSt.com: What foreign investment dollars are having the biggest impact on US real estate?

Vandell: Traditionally, at least in recent years, Canada has been the largest foreign investor in US real estate, but there’s been a real increase by the Asian countries and the various funds from those countries. China and Russia have become big players, Singapore through its sovereign wealth funds, Malaysia and Australia. And Norway has recently become one of the largest investors in US real estate through its sovereign wealth fund. Countries are making use of their oil revenue and trying to put 5% into real estate—and more in US real estate recently.

GlobeSt.com: Where geographically is most of this money going?

Vandell: Traditionally, most of the foreign money allocated for US real estate has been invested in gateway cities like New York, San Francisco and Washington, DC, but more recently we’ve seen an increasing proportion in Houston, Los Angeles and Miami (which has a Latin American flavor to it), and they’re talking about some of the money going into Austin and other knowledge and tech centers like Silicon Valley. If you’re focusing on California, the biggest amount historically was in the San Francisco area at first, then Silicon Valley, but more recently Los Angeles is coming in from a variety of sources and sectors. This also includes the Greater Los Angeles area of Orange County.

GlobeSt.com: On which sectors are they concentrating?

Vandell: When you look at the sectors, you might think of the high-end, triple-A office buildings, but foreign investment has moved substantially beyond that. Last year, a lot of foreign money went into multifamily, and this year it has been on less jazzy industrial properties. For the most part, these are not class-B properties (they are investment grade. They’re moving more into value-add a little bit, but they’re typically investing for the long haul—they’re not flippers by any means. They’re bidding down cap rates by this activity, and class-A cap rates in some major cities are below 4%.

GlobeSt.com: Why are foreign investors willing to drive up prices and drive down cap rates in order to own here?

Vandell: The reason they can do this is because they don’t have all the strictures. If they’re holding a property for several decades, they can accept the risk. One thing that’s often overlooked: a lot of single-family residential is being bought by foreign nationals, and it can be urban condo or suburban high-end markets. A lot of capital moving out of China into investments elsewhere is motivated by future holding and possibly for family members. This has happened before to a degree—in the late ‘80s, this was going on in the Bay Area.

GlobeSt.com: Why are foreign investors seeing US real estate as a good bet?

Vandell: These folks can pay all cash, and strict mortgage qualification standards in this country have put a damper on new-home and family-home construction and the ability of people to transact domestically to buy their first home. This is attracting institutional and foreign investors. One of the factors is that institutional investors use a transparency index that deals with risk and other issues related to real estate, and the US has one of the best transparency indices. The rule of law is enforced here black money exchange is minimal in the US, and we have a very transparent process in terms of acquisition, so they have a greater confidence in their ownership position.

Also, the dollar has gotten stronger relative to many currencies, so they’re trying to get an additional pop through currency appreciation. It’s not true in every case, but many European currencies are much weaker than before.

In addition, there’s a sense that the US is in a sweet spot in terms of growth in the economy. The demand for real estate is clearly related to the growth in the economy. As the economy grows, the demand for hotels, industrial—virtually all of the sectors—increases. China is slowing down somewhat, and many European economies are not doing well—along with Latin America—so from that standpoint, it looks attractive, too.

And finally, there’s EB-5. I have students in China from well-to-do families who are actively involved in this. They started their own programs where they bring this money in and it’s pooled for larger investments. EB-5 is one of the major sources of capital for real estate development in the state of Vermont, which has formalized this process. They like to get their money out of the country as quickly as possible—that’s a driver, too—but there are also restrictions holding the money back.

GlobeSt.com: Are foreign investors impacting values and the amount of distressed real estate?

Vandell: To the extent that there’s a large stock of distressed real estate, it’s not primarily where their money is going. This is not a major focus of foreign investors, so there’s less of an impact there, although it’s clearly having an impact on non-distressed properties. There’s a huge demand from foreign buyers for condos in New York City, and we see some of that here in high-end areas. This is certainly having an impact on values and driving cap rates down. Yield is more important to domestic investors than to foreign because they’re looking at longer hold periods.

Sovereign wealth funds have become so important. Basically, all the sovereign wealth funds diversified into many different types of investments, but this never happened in the US. In the Middle East, China, Norway and other European countries, Australia, Japan and Singapore, they all have sovereign wealth funds that have been a major source of investment capital. They recognize investment-grade CRE especially—it’s really a global market now. It’s broadly diversifying across the world.

Learn more about the EB-5 program by following this Shalom Segelman Twitter account.

EB-5 for developers: Options for raising capital

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The EB-5 visa program was created in 1990 as part of the Immigration Act in order to boost economic growth and job creation.


To foreign investors, the EB-5 visa program provides an opportunity to obtain a green card in return for a minimum investment and the creation of at least 10 jobs for American citizens. To developers, EB-5 is a low-cost source of financing for a variety of projects.


Developers have three ways to access EB-5 financing:


Regional center designation



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Developers have the option to access EB-5 financing by applying for a regional center (RC) designation from the USCIS. The process is long and costly, and requires the filing of a Form I-924, Application for Regional Center Under the Immigrant Investor Program petition, paying various fees, and assembling documentation such as a sample business plan and economist report for the proposed project. The advantages of obtaining EB-5 capital by seeking RC designation include less stringent requirements when it comes to job creation. RCs need only to create 10 indirect or induced jobs, or jobs that are created by the project's suppliers, vendors, or other ancillaries, whereas individual EB-5 investments require 10 direct full-time jobs. RCs are also allowed to pool funds from multiple investors: there is no limit to the number of investors that can contribute to a project as long as the job creation requirement is met.



 Money invested through RCs can go directly into a project, or be held in escrow until the investor's I-526 Immigrant Petition by Alien Entrepreneur is approved.

Regional center affiliation 



Many developers opt to “rent” an existing RC to avoid the time and expense associated with creating a new one while reaping most of the same benefits. In return, the RC might ask for a portion of the project's revenues or a fixed fee. 


Direct investment 


Image Source: starteb5.com

With direct investment, developers receive financing directly from investors, cutting out the middleman. Investors are typically more involved and invested in the project. In addition, while regional centers can have multiple projects, direct EB-5 projects must be formed separately and have stringent requirements, such as the creation of 10 direct full-time jobs. 


Developers who wish to take advantage of the EB-5 program for their financing needs should consider seeking the guidance of an EB-5 specialist for guidance. 


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America’s top 5 states for business

Image Source: cnbc.com

Location is one of the primary keys to successful business operations. In the United States, this means finding the right state where one’s business would grow.

Aimed to find the best places for commerce, CNBC ranked the 50 states in America to determine the one that has the most ideal business climate for investors and entrepreneurs. Here is what the study revealed:

Georgia: Topping the list for the second consecutive year, the southern state has shown strength in terms of job growth and its rebounding housing market. Home to a number of Fortune 500 companies and one of the busiest airports in the world, Georgia has marked superiority in transportation and infrastructure.

Texas: Also showing a solid performance in recent years, Texas has intensified its goal of attracting businesses and jobs through massive ad campaigns in 2013. Last year, the state has added more than 300,000 jobs in the market. It also ranks high in terms of technology and innovation.

Image Source: hcareers.com

Utah: A major tourist destination for outdoor recreation, Utah remains one of the most competitive places in the U.S. for traditional lending and venture capital.

Nebraska: Ranked as the 10th cheapest state to establish a business, Nebraska tops the list in terms of quality of life and business friendliness.

North Carolina: Adding jobs at rapid rate, North Carolina has showcased a massive and growing workforce, finally reviving from its economic struggle during the recession in 2007.

The competitiveness of the states in the study were based on the cost of doing business, economy, infrastructure, workforce, quality of life, technology and innovation, business friendliness, education, cost of living, and access to capital.

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Shalom Segelman is an EB-5 visa specialist in search of investors looking into gaining a Green Card in exchange for a job-creating investment in the U.S. Learn more about him by visiting this Facebook page.

REPOST: Real Estate Financing Through the EB-5 Investor Immigration Program

The article below discusses how the Immigrant Investor Program can be used as a tool for real estate financing:

Image Source: nreionline.com

One of the largest challenges for most new real estate developers (especially, when it comes to commercial properties) is funding. Sometimes traditional places investors go to for financing real estate projects can be difficult to find. In 2008 as the usual sources for money started to dry up, many business owners and real estate developers started turning to a different source of funding for their projects. The Immigrant Investor Program, EB5 as it is also known, was signed into law in 1992, but only relatively recently has it become a tool for real estate financing.

The program is administered by the U.S. Citizenship and Immigration Services (USCIS). The program allows for foreigners with deep pockets to get a green card and become a conditional, permanent resident of America. With an investment of at least $500,000 in a qualified, for-profit business, the EB5 program can be a win-win.

There are two basic options available to “investment immigrants.” A person can invest on his own as an “individual investor” or they can pool their money and invest through an “EB5 Regional Center.”

If an investor chooses to invest on their own, they must find the property or business on their own and it should be one they can directly manage. This makes it an attractive option for people who prefer to have a hands-on style of management.

Investing through a regional center, the investor isn’t alone. Regional centers help sustain economic grown and job creation in specific areas and act like brokers who match investors and developers. As reported by Investorvisa.ae, roughly 95 percent of all visa investments are channeled through regional centers and the centers frequently coordinate multiple development projects at any given time.

The EB-5 program has expanded as more real estate developers learn of the program and see the benefit. In 2007 there were 11 regional centers nationally. Today there are over 200. The number of investors has grown as well. In 2007 there were just 775 EB5 Investor applications. Today that number has grown into the thousands.

One downside of the EB5 is the amount of time required before the money can be seen. The interval between initial application and funding can be up to 12 months in some cases, and many cases take up to a year and a half. The waiting period can be reduced if a real estate developer wants to use the capital before the visa is issued. If the visa is later denied though, the funds must be returned to the investor. Because of this, some developers ask for more capital than is actually needed for their projects.

President Obama signed into law a three-year reauthorization of the EB5 program in 2012. With the increase in interest in the program and the past success, Congress is starting to review the idea of making the EB5 program permanent. Another option being considered is lowering the minimum threshold for investment to allow more foreign investors, which would help fuel an American real estate recovery.


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