New ‘golden ticket’ visas to help recovery in prestige Australian residential markets

The struggling prestige end of the residential market is expected to be boosted by the federal government’s new fast-track investor visa aimed at bringing in capital from wealthy Asian immigrants.

The new Significant Investor Stream Visa requires an investment of at least $5 million in state/territory bonds; an ASIC regulated managed investment fund; or, a direct investment in an Australian company, which would include investments in commercial property backing a business such as a hotel, lodge or other tourism business.

The visa allows immigrants to skip over skilled migration requirements such as being proficient in English while requiring that immigrants only spend a minimum of 40 days a year in Australia over the four-year visa period.

There is also no upper age limit and the main applicant does not have to meet the business points test.

Such investors are also likely to require somewhere to live and may have further funds to invest in both the residential and commercial property market.

According to Sandie Dunne, who runs prestige property specialist Dunne Mosman on the Sydney lower North shore, the new legislation is already having an impact with “several local top end sales under negotiation”.

“There has been a rise in enquiry for high priced properties which have languished on the market for a while," she says.

According to Dunne, even a handful of new buyers from this source will make a difference and bring back confidence in the sector.

“Hopefully we will see sellers listing their properties in the New Year,” she says.

Rob Forde, CEO of Harcourts NSW, sees benefits not just to the top end market but the economy in general, with flow on effect across a number of markets.

“High net worth investors will generally have sound entrepreneurial and business experience which will help to further drive the economy. There are requirements for the investors after their purchase to spend at least 40 days per year in Australia for the time they hold the visa, helping to contribute to local economy.

“Regardless, if the investors stay in Australia they will continue to pay taxes on their Australian property (stamp duty, rates and land tax), which will help in the continued development of infrastructure and contribute towards state budgets which are in need of increased revenue,” Forde says.

The launch of the visas late last month has triggered interest from Asian-based commercial property investors.

CBRE Hotels’ Wayne Bunz and Mullins Lawyers’ Curt Schatz and Tony Hogarth have been advising numerous Asian based investors who have shown keen interest in the hotel market since the introduction of the visas was mooted earlier this year.

They expect further movement by a number of those parties in the hotel investment sphere in 2013.

“The purchase of a hotel, hotel resort or an island with tourist facilities, for example, would be a qualifying business, whereas an investment in vacant land to be held for long term capital gain or rental property might not comply,” says Bunz

“A number of Chinese groups have inspected assets we have had on the market in recent months, many of whom have watched with keen interest to see the final form of the Significant Investor Visa. We are expecting significant interest in this visa from investors considering the Day Dream Island Resort and Spa.”

Foreign investment review board (FIRB) requirements must still be met. However, most commercial enterprises have a substantial financial threshold (currently $244 million) before requiring FIRB approval.

The extent of the threshold varies in some instances, depending upon the specific nature of the proposed investment and the nationality of the investor. Americans have a higher threshold than other nationalities (currently $1.062 billion for most investments).

Tony Hogarth, who is also a registered migration agent say it is significant that English language is not a requirement for these visas

“This is likely to open up the Australian market to Chinese investors in particular, where language skills may have been a prohibitive factor in the past.”

Further information on the visa can be found at the Department of Immigration, which provides this summary.