There is a game changing development for buyer agents and the Australian property sector. The new Significant Investor Visa scheduled for late November 2012
may well signal the start of a new property boom. The Australian Government has announced a new visa pathway for migrant investors coming to Australia. This program is targeting what the Government sees as potentially 10,000 egliible migrants who have demonstrated experience and success in business or investment.
The Significant Investor Visa is particularly targeting Chinese migrants as evidenced by the fact that the Australian Government has named the new visas the 188 and 888
. The number 8 is regarded as an auspicious number while multiple 8’s are considered very lucky! It could have a dramatic effect on residential property prices in the major cities of Sydney, Brisbane and Melbourne.
Key Components for Eligibility
Lets look at some of the key components of the new significant investor visa. Overseas applicants will need to:
- submit an expression of interest in SkillSelect
- be nominated by a state or territory government
- make investments of at least five million Australian dollars into AISC approved asset classes
The complying investments include state or territory bonds, ASIC regulated managed funds and direct investment into private Australian companies. There are a few other investment parameters that the government is steering migrant investors towards but essentially they want the new capital inflow outside the domestic superannuation regime.
Now where it gets significant for property buyers is the residency requirement under the new visa. The new migrant pathway requires 160 days spent in Australia over 4 years
and 320 days over the 8-year period covering two visa extensions. This will have potentially huge implications on housing stock and prices.
Motivation for Residency Visas
Certainly the government has done its research. Just look at the tourism numbers from mainland China for the 12 months to August, 700,000 visitors and a growth rate of 15%
. But I sense confusion among the fund management industry hoping to get a slice of the $5.0 m of significant investment capital. They are missing the point in trying to design product to comply and deliver returns of 6 – 7% per annum if lucky. Does anyone really think Chinese Investors are coming to Australia for return? It’s my assessment that the key motivation for the significant investor migrants are as follows:
- A refuge destination should political and socio-econmic factors become unstable
- An avenue to have their children educated in a Western Country
- And finally a safe investment destination outside their current controls
Lets do the numbers to get a real picture of what the new visa class means for Australia. It is conservatively estimated there will be 10,000 migrants eligible. That means $50 billion for investment into managed funds and Australian Companies. If we assume the typical migrant investor with $5 million in investable capital will probably look to buy a house or apartment worth at least $1 m, then that equates to $10 billion of residential housing stock. It also means a huge surge in business for the Immigration Industry. But does that also mean the Migration Agents and Lawyers will now act as gate-keepers to the fund management industry and in a sense bypass the AISC approved financial adviser system? We will have to wait and see. It is not hard to see that even with moderate success in the new visa category, we will experience a huge boom in the Australian property sector. Hold onto your hats!
“By Shane Clinton”