Australian visa aims to attract Asian hotel investors
The sale campaign for Australia’s iconic Daydream Island Resort and Spa has created considerable buzz around a new investor visa which is tipped to spur increased offshore demand for Australian property assets.
The significant investor visa (SIV) came into effect on November 24, 2012. The Australian government initiative is designed to attract high net worth migrants. It requires an A$5 million (HK$40.1 million) investment in Australia, in exchange for permanent residency.
We have been advising numerous Asian-based investors who have shown keen interest in the hotel market as well as the SIV since its introduction was mooted earlier this year. 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 the visa would take.
Since the official November 24 introduction, investor seminars outlining the potential of the SIV have been filled to capacity. We expect this to translate to heightened interest in assets such as Daydream, with some forecasters tipping it will spur at least A$3.5 billion in new investment in Australia each year.
In order to qualify for the visa, applicants will be required to:
- Submit an expression of interest to the Department of Immigration and Citizenship (DIAC)
- Be nominated by a State or Territory Government
- Invest at least A$5 million in State/Territory bonds; an ASIC regulated managed investment fund; or a direct investment in an Australian company
Significantly, 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.
There is also no upper age limit and the main applicant does not have to meet the business points test. Foreign Investment Review Board requirements may also need to be met, however most commercial enterprises have a substantial financial threshold (currently A$244 million) before requiring FIRB approval.
Whilst there are a number of options available for foreigners seeking to invest in Australia and qualify for this visa, it is expected that hotel assets to be particularly attractive to Asian investors because they are one of few qualifying investments that include property and a business as a going concern.
Furthermore, significant investors can engage management to run the business, they are not required to have direct involvement in managing complying investments, which is a relaxation on the requirements for other business skills visa categories.