Abbott government expanding the Chinese significant investment visa program gives impact on the Australian Property Market
8 Apr 2014
A program that provides residency visas to Chinese and other millionaires with $5 million to invest in Australia is set to be expanded.
The Abbott government is reviewing and plans to expand the significant investment visa program, which has granted four-year visas to 116 foreigners in just over a year.
The review will seek ways of speeding up approvals and will consider expanding the assets the $5 million can be invested in beyond bond and commercial property funds, possibly to venture capital and start-ups.
Assistant Minister for Immigration and Border Protection Michaelia Cash said the review could result in the introduction of permanent residency visas for investment migrants.
The review is unlikely to allow investment in houses and apartments because of the political repercussions from the fear of Australian buyers being squeezed out of the market, but it definately would have strong impact in the Australian prestigeous property marketing as the investors need homes to settle they families.
Chinese are the biggest buyers of direct real estate in Australia, according to the Foreign Investment Review Board’s latest tally of approvals.
Just as Middle Eastern and Russian money likes to have places in London, there’s certainly a sense in which affluent people in Asia – like to have property in Australia.
The Chinese population . . . have become quite affluent pretty quickly, and . . . when that happens, one of the things they do is acquire assets in other places.
Credit Suisse estimated there were 1.1 million Chinese who could “easily afford” to buy apartments in Sydney and could spend $44 billion over the next seven years on Australian real estate.
Current Chinese investment in residential real estate is less than 2 per cent of the overall residential property turnover each year.Credit Suisse expects a 30 per cent rise in potential Chinese investment.
Under the Abbott government, the rate of special investment visas granted has increased.
Since the program started in November 2012, only 28 visas were approved up to the 2013 election. There have since been 88 approvals – a tripling in half the time.
“We recognise there are significant implementation issues that are currently holding up the progress of this program and we want to get this review under way to send a clear message that Australia is open for business on this visa,” Senator Cash said.
The Canadian government has just shut down a similar scheme after 28 years.There are 46,000 applicants outstanding and there are some expectations the leftover might fuel demand for Australian visas.
Approved Australian special visas, 90 per cent of which went to Chinese investors, have resulted in more than $580 million in investments. A further 486 applicants are being processed.