Foreign Investment

Keys realty currently has many projects with Foreign Investment Approval.

Information for Foreign Investors

In the forward to the publication "Australia's Foreign Investment Policy" the then Treasurer, John Dawkins, said "the Australian Government welcomes foreign investment. The government recognises the substantial contribution foreign investment has made and can continue to make to the development of Australia's industries and resources".

The Foreign Investment Review Board is an advisory body set up under the Foreign Acquisitions and Takeover Act 1975. Its main functions are:

- To examine proposals by foreign interests in Australia and to make recommendations to the Government on those proposals

- To advise the Government generally on foreign investment matters

- To provide guidance if necessary to foreign investors on those aspects of their proposals not in conformity with Government policy and to suggest ways by which the proposals may be amended.

Foreign interests proposing to acquire real estate should be individually submitted for examination and approval unless they fall into certain exempt categories. The two most common types of real estate acquired by foreign investors are:

1. Residential
2. Commercial

1. RESIDENTIAL REAL ESTATE

1.1 What is Residential Real Estate?

Residential real estate means all Australian real property other than (i) commercial properties (ie offices, factories, warehouses, hotels, restaurants, shops, recreation facilities etc.) and (ii) land which is integral to a farming business. Acquisitions of "hobby farms" and "rural residential" blocks by foreign interests are also examined under the policy applying to residential real estate.

1.2 Who Should Apply?

All proposed acquisitions of residential real estate should be submitted for examination regardless of value unless the purchaser is an Australian citizen, permanent resident, approved migrant or a foreign national having an entitlement to take up or retain permanent residence in Australia (such as a New Zealand citizen). Other foreign persons wishing to purchase residential real estate (including temporary residents and the foreign spouses of Australian citizens and permanent residents) must apply in advance to the Government through the Foreign Investment Review board for approval.

1.3 Developed Residential Real Estate

Developed residential real estate means existing houses, flats or units. Acquisitions of developed residential real estate by foreign interests are not normally approved except (i) in the case of foreign companies buying for their senior executives resident in Australia for periods longer than 12 months, and (ii) foreign nationals temporarily resident in Australia for more than 12 months purchasing a residence for use as their principal place of residence while in Australia (and not for rental purposes), subject to the sale of the property when they cease to reside in Australia. This latter category includes long-stay retirees, and students 18 years of age and over studying courses of more than twelve months duration at recognised tertiary institutions.

1.4 Residential Real Estate for Development

Acquisitions of residential real estate (including vacant building allotments) for development by foreign interests are normally approved subject to a specific condition requiring construction to commence within 12 months. Applications to acquire existing residences for redevelopment may be approved under this category provided that the proposal provides for substantial redevelopment expenditure in relation to the acquisition cost of the property and/or an increase in the housing stock. Once the development condition has been fulfilled, there is no restriction on the subsequent use of the property by the foreign investor, ie. it may be rented out, sold or retained for the foreign investor's own use.

1.5 "Off-the-plan" Purchases

Foreign interests may apply to acquire home units, town houses, house/land packages etc. in a new development, either "off-the-plan", during the construction phase or when the dwelling is newly completed, provided that it has never been occupied or sold and provided no more than 50 per cent of the dwellings in any one development are sold to foreign interests. This category includes acquisitions that are part of extensively refurbished buildings where the building's use has undergone a change from non-residential (eg. office, warehouse, hotel, motel) to residential and the cost of refurbishment is at least 50 per cent of the total acquisition cost based on purchase price or market value of the property, whichever is the greater. Developers of such properties may apply in advance to sell up to 50 per cent of residences to foreign investors. where such approval has been granted, it is not necessary for individual investors to apply. A property purchased under this category is not subject to any restriction on its subsequent use, ie it may be rented out, sold or retained for the foreign investor's own use. However, when the property is sold it is treated as developed residential estate and its sale is subject to the restrictions applying to that category of residential real estate.

1.6 Integrated Tourism Resorts

Acquisitions of residential real estate within a resort which has been designated by the Government as an Integrated Tourism Resort do not require foreign investment approval. However, the operators of the resort are required to report annually to the board providing details of the ownership of all accommodation within the resort.

1.7 Australian Citizens and Foreign Spouses

Applications by Australian citizens and their foreign spouses to purchase residential property in their joint names are normally approved without conditions.


2. COMMERCIAL REAL ESTATE

2.1 What is Commercial Real Estate?

Commercial real estate means all Australian real property other than (i) residential properties (ie. houses, flats, units, vacant land zoned for residential development, "hobby farms" and "rural residential" blocks) and (ii) land which is integral to a farming business.

2.2 Who Should Apply?

Acquisitions of commercial real estate by foreign interests should be submitted to the Government through the foreign Investment Review board for approval prior to purchase unless the acquisition is exempt (see below). Foreign interests are natural persons, other than Australian citizens and permanent residents who have been resident in Australia for at least 200 days out of the last year, and corporations, businesses or trusts in which there is a substantial foreign interest. A substantial foreign interest is a holding of 15 per cent or more by a single non-resident person or corporation (either alone or with associates) or an aggregate holding of 40 per cent or more by a number of non-residents taken together.

2.3 Exempt Commercial Real Estate Acquisitions

Acquisitions of commercial real estate by Australian citizens resident abroad or companies or trusts owned by Australian citizens resident abroad do not require approval. Acquisitions of commercial real estate where the total value of the property being acquired is less than $5 million do not require notification or approval unless (i) the ownership of the property is vested in a holding company which is being acquired or (ii) the property is being acquired by the agent of a foreign government. Acquisitions of commercial real estate which are to be used immediately for industrial or commercial purposes which are incidental to an existing or proposed business (other than a business or dealing in land or operating hotels motels or tourist facilities) do not require notification or approval. (further details of exempt acquisitions are available from the booklet "Australia's Foreign Investment Policy: A Guide for Investors".)

2.4 Developed Commercial Real Estate

Acquisitions of developed commercial real estate valued over $5 million are normally approved (unless considered contrary to the national interest) subject to the acquisition being made with 50 per cent Australian equity. However, approval may be given for acquisitions with up to 100 per cent foreign equity where the parties can show that the property was actively marketed for a period of three months prior to their purchase or was sold by public auction or open tender.

2.5 Commercial Real Estate for Development

Acquisitions of commercial real estate valued over $5 million for development or substantial redevelopment are normally approved (unless considered contrary to the national interest) subject to a condition that construction commence within a specified period of time (normally 12 months).

2.6 Applications

The Board is unable to give "in principle" approval to persons wishing to acquire property, so an application for foreign investment approval must specify the particular property to be acquired.