Significant investment in Australia – a growing Asian trend

At Prosperity, through our extensive global alliances with LEA and IAPA, we are noting that foreign investment into Australia continues despite the softening economy.

Barely a week goes by without an enquiry from our USA, UK or Asian colleagues seeking advice on Australian investment and regulatory issues. More recently we are fielding enquiries from those seeking to migrate using a Significant Investment Visa.

In fact, in the coming financial year, immigration lawyers, BasisPoint predict there are more than 1000-1500 significant investment visa applications expected for investors and their families. An annual quota of approximately 7400 visas has been allocated as investors and their family members elect to move here under the Business Innovation and Investment Visa program.  With an average of 3.5 people per family unit the upper limit would sit at 2114 as a real ceiling to the quota.

The Significant Investor Visa program for Australia was only launched in November 2012, and this year is expected to yield $6b in annual inflows to Australian funds and businesses from ultra high net worth investors, predominantly from Asia.

Foreign investment in Australia isn’t a new thing, but investment coupled to migration is certainly on the rise with dramatic increases in interest from China and other Asian nations.  China was ranked as Australia’s third largest foreign investor ($16.2b) in the 2011/12 financial year, behind the US ($36.6b) and the UK ($20.3b), but Chinese foreign investment arrived in much smaller parcels.  The average deal size done by Chinese investors was $3.4m which contrasts with the average US sourced deal size of $136.6m.

The most common deals done by investors were in the resources and real estate sectors, accounting for 32% of all foreign investment over the year.

What this says to us is that the Chinese investor is out there looking for investment opportunities that are smaller in size and more accessible. Asian clients we have represented are taking a drip feed approach with bite sized investments initially as they seek to understand our domestic markets and regulatory regimes.

But what are they buying? There were 11,142 Foreign Investment Review Board (FIRB) approvals last year from over 40 countries and 9768 of them were for residential real estate.

Those moving here on Significant Investor Visas are mostly first generation wealth and often have a wider range of risk appetite and investment outlook than those who are carrying second or third generation wealth.

For more information into the Significant Investment Visa please contact Luke Malone, Director of Prosperity’s Asian Business Desk.

About Luke Malone

Luke has more than 12 years experience providing assurance and audit services to private sector government, and not for profit entities.

He holds the role of Director in Prosperity’s Corporate Assurance group. He specialises in the provision of external audits, risk management reviews, due diligence and corporate governance.

Luke’s specialty is working with listed companies, private equity backed investee companies and entrepreneurial businesses that are looking to grow their businesses towards a future exit. He has worked with a number of private equity backed investee companies and has assisted them on the journey of growth towards both private sale and IPO.

Luke has worked across a vast array of industries including retail, property, manufacturing, private equity, biotechnology, telecommunications, information technology, mining, franchise and professional services.

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