In recent years, there has been a significant shift in the political climate across Latin America. Left-wing governments are coming into power in several major economies, including Mexico, Brazil, Colombia, and Argentina, promoting a platform of larger government involvement, higher public spending, and increased intervention in the market. They aim to reduce inequality through higher taxes on the wealthy, expanded welfare systems, and more state-funded healthcare. Furthermore, they are showing a greater dedication to protecting the environment and adopting a more protectionist stance ¹​.

Yet, this political shift is happening against a backdrop of economic uncertainty. The region’s economy is forecasted to grow more slowly in 2023, with increasing recession risks. Latin America’s estimated GDP growth of 3.3% in 2022 is expected to slow down to only 1.5% in 2023 due to adverse external conditions and monetary tightening aimed at fighting high inflation. This economic deceleration is prompting concerns among High-Net-Worth Individuals (HNWIs), leading to potential capital flight ²​.

One avenue for capital flight that’s gaining popularity among Latin American HNWIs is the U.S. EB-5 Immigrant Investor Visa Program. This program provides a pathway to U.S. residency for individuals who invest in a new commercial enterprise that creates jobs for U.S. workers. As of the EB-5 Reform and Integrity Act of 2022, the base investment amount has been set at $1,050,000, with a reduced amount of $800,000 for investments in Targeted Employment Areas (TEAs).

Data from the U.S. Department of State reveals a significant uptick in the issuance of EB-5 visas to Latin American nationals in recent years. In fiscal year 2022, Brazil led the region with 336 visas, followed by Mexico with 164 visas, and Venezuela with 103 visas. Argentina, Ecuador, Colombia, and Peru also showed a substantial interest, with 50, 24, 22, and 13 visas issued respectively ³​.

Simultaneously, HNWIs in Latin America are not just securing U.S. residency through the EB-5 program, but are also strategically moving their assets into U.S. real estate as a hedge against inflation and political instability in their home countries. The U.S. real estate market, with its history of stability and potential for value appreciation, offers a safe haven for investors seeking to protect their assets from volatile economic conditions in Latin America. From luxury condos in Miami to commercial properties in New York, to single family home rental properties in Midwestern States like Ohio and Wisconsin, Latin American HNWIs are diversifying their investment portfolios by acquiring tangible assets in the U.S.

This surge in U.S. property investments is particularly noticeable among HNWIs from countries experiencing significant economic and political challenges. For instance, wealthy individuals from Venezuela and Argentina, countries grappling with high inflation rates and political uncertainty, are increasingly turning to U.S. real estate as a form of wealth preservation.

Similarly, in Mexico and Brazil, where recent political shifts have led to concerns over potential economic policy changes, real estate investments in the U.S. offer a way to safeguard wealth against possible economic instability.

Importantly, these real estate investments often go hand in hand with the EB-5 visa program. By investing in qualifying commercial real estate projects, HNWIs not only secure a tangible asset in the U.S. but also have the opportunity to obtain U.S. residency. This dual benefit further increases the attractiveness of the EB-5 program and U.S. real estate for Latin American investors.

As Latin America continues to experience political and economic changes, the investment behaviors of its High-Net-Worth Individuals are likely to evolve as well. The U.S. EB-5 Immigrant Investor Visa Program and U.S. real estate market are proving to be compelling options for these individuals seeking to secure their wealth and future. As these trends continue, the U.S. is likely to remain a key destination for capital flight from Latin America.