Why South Africans should consider their offshore investment options now.
*This content is brought to you by LCR Capital.
High net-worth South African investors, particularly those thinking of living outside of South Africa, should consider their options and make prudent decisions timeously before they lose out due to further major political upheavals, ratings agency downgrades and legislative changes in the US that could make visa programs like the EB-5 investment program more expensive to obtain. So says Douglas van der Merwe from LCR Capital, a private equity firm that offers wealthy South Africans EB-5 investor visas.
“We’ve already seen the rand lose a lot of the ground that it made against the dollar just this week thanks to the questionable Cabinet Reshuffle that saw our Minister of Finance, Pravin Gordhan, and other key Ministers replaced by the President of South Africa, Jacob Zuma. The rand’s plummet is down to the knee-jerk reaction of the markets and as a result potential investors have lost out on the currency exchange. While it may be prudent to wait until some stability returns to the South African rand, there are other reasons why investors should consider investing in the EB-5 program sooner rather than later,” he says.
The EB-5 visa programme is an increasingly popular United States Citizenship and Immigration administered (USCIS) initiative that enables foreign investors and their immediate families to obtain American green cards by investing $500,000 (just over R6.7m) in U.S. businesses or real estate projects. It is gaining traction among wealthy South Africans with over 40 applications approved in 2015 (latest figures).
But van der Merwe warns those ‘sitting on the fence’ regarding the EB-5 investor visa programme not to weigh up their options for too long, as further local political turmoil or legislative changes in the United States could make it more costly to invest in the EB-5 programme in coming months.
“A ratings downgrade by the likes of Standard & Poor’s as well as any hint of further deterioration in South Africa’s economic prospects could impact the rand negatively, making it more expensive to invest in this visa programme. Changes are also expected to the EB-5 visa programme as the US government is looking to raise the minimum investment amount to $1.35m (over R18.2m). There’s a narrow window of opportunity of only a couple of months before this change could come about so investors should strike now while the amount remains under the annual R10m exchange control limit,” says van der Merwe.
To acquire an EB-5 visa via LCR Capital, investors can invest in the ‘Surf Club’ Four Seasons Hotel, an iconic 1930s prime Miami property, which in its heyday was frequented by Grace Kelly, Winston Churchill and Frank Sinatra. LCR Capital is seeking $100-million from 200 foreign EB-5 investors. Funds are returned with nominal interest after five years while green cards are obtained for the investor and his or her immediate family members within approximately 18 months.
Since 2013 around 100 South Africans have taken advantage of the EB-5 programme and have since either permanently immigrated to the USA to retire, set up business interests, or stay at home and become dual residents.
“Investing in the EB-5 programme is a great way to hedge your bets against any further political turmoil in South Africa and to ensure there’s a ‘Plan B’ for you and your family. Investing in this programme can guarantee you dual citizenship or immigration to the USA, enabling you to work, study and start up a business there. In these volatile times, nothing is certain but it’s good to have alternatives in place, should the investment and personal development options and opportunities in South Africa diminish,” adds van der Merwe.
The EB-5 visa process takes between 16 and 18 months whereafter a temporary green card is granted for the investor and their immediate family. Permanent residency is granted within four years and the initial capital is returned, with interest, after five years. Visit www.lcrcapital.co.za for information.