06 Nov 2013
Words Tim Admin

New 'Golden Ticket' visa offers further advantages for cashed-up Asian investors keen on Australian real estate

The stars have well and truly aligned for Asian buyers wanting to invest in Australian residential projects. The most recent development has been the introduction of “golden ticket” visas aimed at fast-tracking wealthy Asian investors’ entrance into Australia with a provisional four-year visa followed by the opportunity to apply for permanent residency. The new Significant Investor Stream Visa (as it is officially known) requires an investment of at least $5 million in state or 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 or lodge. The visa allows immigrants to skip skilled migration requirements such as being proficient in English and requires immigrants spend a minimum of just 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. The Foreign Investment Review Board (FIRB) requirements must still be met under the visa 188 and 888. However, most commercial enterprises have a substantial financial threshold (currently $244 million) before requiring FIRB approval. Tony Hogarth, who is a registered migration agent, says 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.” The visa complements a number of factors that make investing in Australian residential projects particularly appealing to Asian investors. According to Savills Australia’s Victorian investment directors, Clinton Baxter and Nick Peden, Asian investors already benefit from easy access to capital, and they also have tremendous competitive advantages over local developers of residential projects, including: • Lower costs of funds from offshore sources; • Established project marketing avenues in south-east Asia, leading to strong and rapid pre-sales of apartments; and • A capacity to bypass onerous pre-sale requirements of the local banks. These factors allow Asia-based developers to respond more rapidly to market conditions and deliver projects more quickly than most local developers. “We regularly have several offshore buyers vying for the same property, such is the depth of interest and flow of capital from Asia into the Melbourne market,” say Baxter and Peden. CBRE associate director Mark Wizel says there can be no doubt many of the new entrants have a far greater ability to contribute their own equity to both development projects and investment assets. Furthermore, Wizel says that a lot of mainland Chinese developers are not adverse to risk and aggressively gear their projects, especially in the development space. “We have seen many examples of Malaysian, Singaporean and Chinese developers using local Australian banks for senior debt funding and believe this will continue. “One area of particular note, however, is the emergence of offshore banks (mainly Asian) wanting to undertake funding of Australian development projects and investment assets,” he says. “2012 saw the opening in Collins Street of retail branches for ICBC (the world’s biggest bank) and China Construction Bank, both of Chinese origin and both who have already shown a strong interest in supporting Chinese developers and investors in Melbourne. “These banks join the Bank of China in Melbourne, who have been here for some time and whose appetite towards large scale lending is no doubt increasing,” he says. In addition, Wizel says it is understood that OCBC from Malaysia has also been very active as an offshore lender to Malaysian developers working on projects in Melbourne. Wizel says simple things like the language barrier and the ability to understand that mentality of Asian developers given Chinese bank an advantage over local banks. In addition to financial factors, Wizel says both Malaysian and Chinese ties with Melbourne go back many decades. He says Malaysians have an affinity with the city dating back more than 30 years, where many prominent Malaysian property players were educated and where the investment relationship into direct property commenced in the late 1980s. “In relation to mainland Chinese investment, it needs to be noted that Melbourne has a strong history with Chinese people, this is no better understood than the fact that our Chinatown precinct is known to be the oldest Chinatown precinct anywhere in the world with San Fransisco’s Chinatown precinct coming second,” he says.