Property Investment Rules Relaxed for Overseas Investors

Changes in Australian’s Federal government regulations means that it is now easier for overseas investors in invest in Australian holiday units. We’ve discussed before that Australia is quite restrictive about what type of property an overseas investor can buy in Australia can purchase – restricting them to basically new built property.

In the face of the looming collapse of the short-stay vacation apartment market, Canberra has come to the party and relaxed the rules. The change has involved re-classifying hotels and resorts as commercial rather than residential property. Non-resident investors can now buy blocks or individual apartments up to a limit of $50 million ($5 million for heritage listed buildings) without requiring them to jump through the hoops of FIRB.

This change is no accident – its been heavily lobbied for by state tourism groups. The are billions of dollars of projects with well-known names attached: Novatel and Quest for example, which are crying out for buyers. Australians are keeping their hands in the pockets so the hope is that the rest of the world, particularly Asia, will come to the party.

The irony is that the only reason that the rules were so restrictive is that they were put in place to stop the Japanese buying too much Australian property in the late 1980’s in Queensland. Apparently now someone has figured out that overseas owners can’t really take their property with them and the investment benefits – well Australia really.

Some of us aer still bermused by the concept that a holiday apartment was ever considered anything other than commercial! Short-stay units aer run unde ra brand with on-site management, reception and certainly sounds like a commercial operation. Units must usually, be part of the rental pool, though investors can often stay for a limited number of weeks a year.