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President Donald Trump has put a price on coveted green cards—$5 million. That’s how much he plans to sell the gateway cards to citizenship, which allow U.S. residency and the ability to work and do business in the U.S. However, the proposal, first touted by investment guru Grant Cardone in December, is ringing alarm bells in a sector the president knows well—real estate.
Dubbed the “gold card,” Trump’s plan to sell green cards is intended to replace the EB-5 investor visa, which the real estate industry has favored as a way to provide funding for major projects, the New York Times reports. Major developments such as Manhattan’s Hudson Yards, the San Francisco Shipyard, and Trump Plaza Residences in Jersey City, N.J., have all received funding from overseas investors via the EB-5 program, which includes U.S. residency, among its perks.
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The EB-5 program costs considerably less than Trump’s proposed $5 million gold card. According to U.S. Citizenship and Immigration Services, “for petitions filed after March 15, 2022, the EB-5 Reform and Integrity Act of 2022 raises the investment amounts to $1,050,000 for standard cases and $800,000 for targeted employment areas.”
While the EB-5 program is not a huge moneymaker— according to the New York Times, it contributes about $5 billion to the $28 trillion U.S. economy — it is pivotal for a select group of major real estate developers. It dramatically changes the bottom line, turning losses into profits when compared to borrowing more expensive money from domestic lenders.
“Cheap capital is the crack cocaine to the real estate industry and probably every other industry,” Matt Gordon, the CEO of E3iG, which advises both foreign investment-based visa applicants and U.S. companies seeking funding, told the Times. “They and their rather large political donations are going to be very motivated.”
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Established in 1990 to help attract investment for rural and economically depressed areas, the EB-5 program’s approval requirements were initially based on the creation of 10 specific new jobs from the business the visa engendered. Over time, that became a gray area, morphing into each investor’s funding, resulting in 10 jobs overall for the economy.
Although all types of businesses can apply for EB-5 visas, the real estate industry has heavily embraced the program. It allows an investor to get citizenship, lending money at much lower rates than developers would have to pay for construction otherwise.
“You’re really cutting, you know, 30 to 50% of your cost of capital, on a rather significant portion of your capital,” Gordon said.
“Naturally, the whole world is panicking,” Ishaan Khanna, the president of the American Immigrant Investor Alliance, a group that lobbies on behalf of EB-5 investors, told the Times. “As India and China woke up, my phone blew up.”
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“I’m sure that if they can come up with $5 million, they probably have a little extra to buy real estate,” Lawrence Yun, chief economist at the National Association of Realtors, told MarketWatch of potential gold card buyers. “So it will bring about more demand in the ultra-high-end of the real estate market,” Marketwatch said that similar visa programs have increased housing prices in Portugal and Spain.
“Today, 94 out of every 100 such visas are linked to real-estate investment … in major cities that are facing a highly stressed market and where it’s almost impossible to find decent housing for those who already live, work and pay their taxes there,” Reuters quoted Spanish Prime Minister Pedro Sanchez as saying last April.
Trump’s proposed gold card won’t happen overnight. To abolish a legally binding visa program and introduce a new one, Congressional approval is required. It’s unlikely anything much will change until 2027, when the EB-5 program expires, requiring Congress to renew it.
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In 2019, the European Commission warned that golden visa programs, similar to the one Trump proposes, could be used for money laundering, tax evasion, and corruption. The result has been that many European countries stopped or modified their programs. A voting rights advocate, Rotimi Adeoye, described it as “a wholesale rewrite of what it means to be an American. In Trump’s vision,” he wrote on MSNBC.com, “citizenship is no longer about building a shared national project; it is an asset reserved for those who can afford it.”
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This article Trump’s Gold Card Visa Program Is Causing Panic In Real Estate Circles. Here’s Why originally appeared on Benzinga.com