Chinese applications again ranked highest as the largest potential source of foreign investment in Australian property in 2014-15; whilst Victoria stretched ahead of New South Wales to attract the most investment applications in proposed residential property for development.
According to research from real estate firm Knight Frank, the Foreign Investment Review Board (FIRB) Annual Report for 2014-15 was published earlier this month, and according to the report, the FIRB approved a total of AUD$ 194.6 billion worth of proposed investments across all industry sectors that fall within the scope of Australia’s Foreign Investment Policy.
Residential (at 31.2 percent) and commercial (at 18.6 percent) property represented 49.8 percent of all proposed foreign investment in 2014-15. Growth was recorded at 30 percent over the year to reach a total of AUD$ 96.9 billion.
Continuing to drill down into the property sector, approvals for Chinese nationals to purchase Australian residential and commercial property tallied AUD$ 24.4 billion in 2014-15. This was up 97 percent, from AUD$ 12.4 billion in 2013-14. As shown, other active countries included the United States (at AUD$ 7.1 billion), Singapore (AUD$ 3.9 billion), Malaysia (AUD$ 3.4 billion) and the Republic of Korea (AUD$ 2.5 billion).
A large component of residential FIRB approvals in 2014-15 included proposed investment in property for development totalling AUD$ 49.3 billion. Estimating proposed investments include the aggregation of estimated acquisition costs, development costs and costs of both the establishment and development in the case of new businesses.
Non-residents of Australia are currently limited to purchasing new or off-the-plan (OTP) property with a fee payable on application to FIRB. Total investment in developer OTP property was AUD$ 28.7 billion in 2014-15, almost double the AUD$ 16.4 billion over the previous year.
Proposed investment in new residential property for individuals rose 86 percent to reach AUD$ 14.4 billion in Australia, which comprised 20,551 approvals in 2014-15. This was up significantly on 2012-13 when investment approvals were AUD$ 2.9 billion and 4,499 individual purchasers were approved.
As a comparison over the financial year of 2014-15, approvals for existing commercial property actually fell 10 percent to AUD$ 28.5 billion.
Changes to Legislation for Foreign Investors in Australia
From December 1, 2015, all foreign investors must pay a fee before their foreign investment application will be processed and stricter penalties have been ramped up by the Australian Taxation Office for those who breach the rules. For Victoria, including the capital city of Melbourne, this fee is in addition to the state-based 3 percent duty payable on the purchase price, and the annual absentee tax of 0.5 percent on the property value for foreign owners who leave their property vacant for extended periods throughout the year.
Image: Brisbane’s central business district.
