Cape Town – Demand for US investment visas by wealthy South Africans has more than doubled.Data released last week showed that South African demand for US EB-5 visas, which allow people to obtain a green card by investing $500 000 (R6.66 million) into a US business, has increased sharply since 2014.
Doug van der Merwe of LCR Capital, a private equity investment firm that helps high-net-worth investors to acquire the visas, said data showed that the EB-5 market is much larger than the industry previously thought, and it is growing rapidly.
Van der Merwe said applications increased from 18 in 2014 to 40 in 2015.
“We think it’s likely that number will have doubled again in 2016, based on the increased interest we have recently experienced at LCR,” he said.
“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.”
Van der Merwe said the highest demand for EB-5 visas was from China, with 13 530 applications in 2015, followed by Vietnam (289), India (239) and Brazil 229. Brazil had seen the fastest growth in applications, at more than 300 percent, he said.
Van der Merwe said last year LCR had offered South African investors the opportunity to invest in the Dunkin Donuts franchise through a private equity fund.
He said the fund proved hugely popular and was now closed to further investment.
Read also: Signs of drop in international tourism to US
“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.”
Suresh Rajan, the chief executive of LCR, said the Trump administration was reviewing the EB-5 programme, and this had resulted in an increased demand for the visas.
“Investors should be wary of fraudsters operating in this space, and a myriad wannabes who may not have the experience necessary to see the process through successfully.”
Rajan said the success of an application depends on the success of the project being invested in and the number of American jobs created.
“As with any investment, it’s important to do your research before handing over any money. The US EB-5 programme has been in existence since the 1990s. Over the years, a number of fraudulent schemes have been uncovered. To date, these scams have primarily targeted Chinese investors, but it’s important for anyone considering this option to take measures to protect themselves.”