Investment
FOREIGN INVESTMENT IN RESIDENTIAL LAND PROPERTY AND PROJECTS IN AUSTRALIA
BY BENNI ARONI Client Director -Property Pitcher Partners
Why do foreign sovereign funds, investment groups, corporates and high net worth individuals want to invest in Australia?
Common, reasons include: •
their requisite internal investment infrastructures, noting that a number of investors have regional rather than single country mandates • Punitive taxes on foreign investors which may reflect real or perceived prejudices The Treasury is Australia’s foreign investment policy advisor and regulator. It administers the foreign investment framework. However, it is the Australian Taxation Office (ATO) that assesses residential real estate investment proposals and ensures any investment is not contrary to the national interest or national security. I do not intend to replicate charts and graphs in this article, but readers will find Treasury’s statistics on applications and approvals helpful and accessible. The information extends to informing the reader about the numbers of proposals approved or rejected but not to disclosure of applicants, projects, or reasons. Of particular interest is Treasury’s quarterly data on the value of foreign investment in Australia which varies significantly when comparing approved commercial investments and approved residential real estate investments. In the January to March 2023 report:
Stability of government and supporting institutions thus diminishing sovereign risk • A legal framework that is comprehensible and equitable • A stable, resilient and robust economy which continues to avoid recession, and maintain employment, inflation and interest rates within acceptable benchmarks • Proximity to Asian markets (where stability of government, economy or the law may not always exist) • A prosperous population and educated workforce enhanced by an aggressive immigration policy • Cultural improvements in adoption of Environmental, Social and Governance (ESG) considerations • Other factors including English being the primary language, AAA credit rating and favourable exchange rates And why would they not invest in Australia? My top reasons are: • Insufficient rates of return noting some investors require a return premium to invest away from their home markets • Preferred opportunities in other jurisdictions – because Australian deals are too small to warrant
14 – October / November 2023
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