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Are bumper ACT land sales being fuelled by foreign investors?

By 5 June 2014 6

The Land and Development Agency sold the final 60 Lawson blocks at Auction on Wednesday, at an average 34 per cent over reserve, netting $24.74 million for the ACT government. This is on top of the $56 million coined from the first 124 blocks, according to the Canberra Times.

This is all pretty interesting given a note we received today from someone in attendance at a recent auction of Canberra blocks in the North.

A friend of the note writer was bidding on a large block of land to build some residential houses. They were unsuccessful. However, during the auction she witnessed two groups of Chinese bidders making offers around 30% over reserve prices – apparently proxies – buying for overseas investors.

This raised some concerns over Foreign Review Board (FIRB) rules being breached regarding foreign ownership of land. There was also some question of due diligence performed by the ACT government, whether there is any assurance of local citizenship beyond using a valid company registered with ASIC.

Has anyone got any experience with this?

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6 Responses to Are bumper ACT land sales being fuelled by foreign investors?
#1
mezza7612:02 pm, 05 Jun 14

Rules look clear to me:
“Foreign non-residents or short term visa holders can invest in Australian real estate only if that investment adds to the housing stock. This generally occurs by acquiring new dwellings, off-the-plan properties under construction or yet to be built, or vacant land for development.”

http://www.firb.gov.au/content/guidance/downloads/gn3_jan2012.pdf

#2
arescarti4212:09 pm, 05 Jun 14

Two things worth pointing out

1. Just because people look Chinese and speak Chinese doesn’t necessarily mean they’re foreigners.
2. You don’t have to be a local citizen to buy land and residential property, foreigners, temporary residents and permanent residents can all legally buy land and residential property in Australia (with restrictions).

It’s *probably* unlikely that ACT land sales are being fueled by foreign investment, the most recent figures from the FIRB show that pretty much all the action is in Sydney and Melbourne (less than $100 million worth of investment in the ACT, compared to $4+ billion each in Victoria and NSW).

That said the FIRB figures are old, and by most accounts the system is easily dodged, so who knows what is going on. The HOR is currently running an inquiry which may yield answers.

Either way, the ACT Government’s policy of drip feeding land onto the market at astronomical prices is a total disgrace and social disaster that the young and disadvantaged in our community will continue to pay for.

#3
HiddenDragon6:37 pm, 05 Jun 14

Looking forward to the spin headline: “China Backs Light Rail!” – but seriously, I doubt very much whether Chodley and co. would be getting too excited about Canberra real estate in the near future.

#4
dungfungus8:59 am, 06 Jun 14

If it waddles and quacks it is probably a duck.
Of course Chinese investors (and others) are buying up our land and property. The laws say they can and the RBA when asked to comment abot it last week said something like “there is no record keeping that confirms this information” (take that as a yes).
The market at the moment is demand driven there is no doubt of that. The danger with foreign investment is that if there is a financial crisis in China there will be a sudden repatriation of capital to that country so real estate here will be dumped and the bubble will burst.
A little bird told me that most of these houses/apartments purchased by offshore people are not subject to land tax. Can anyone expand on that?
Stlll waiting for someone to tell me which properties in the ACT are exempt from rates. It appears that discussion on this subject (like negative gearing) is taboo.

#5
Tetranitrate5:01 pm, 06 Jun 14

dungfungus said :

If it waddles and quacks it is probably a duck.
Of course Chinese investors (and others) are buying up our land and property. The laws say they can and the RBA when asked to comment abot it last week said something like “there is no record keeping that confirms this information” (take that as a yes).
The market at the moment is demand driven there is no doubt of that. The danger with foreign investment is that if there is a financial crisis in China there will be a sudden repatriation of capital to that country so real estate here will be dumped and the bubble will burst.

I’m note so sure about that last bit. My understanding is that a lot of this is about rich Chinese stashing money offshore because they fear or expect that something will eventually go wrong in China and they don’t plan to be around when angry mobs form and come baying for their blood (since they’re the social/political elite, communist party members who’ve been making hay while the sun shines).

It’s not so much that they’re going to be repatriating money to China at that point, though it would obviously mean the end of further Chinese real estate investment in Australia.

#6
dungfungus5:54 pm, 06 Jun 14

Tetranitrate said :

dungfungus said :

If it waddles and quacks it is probably a duck.
Of course Chinese investors (and others) are buying up our land and property. The laws say they can and the RBA when asked to comment abot it last week said something like “there is no record keeping that confirms this information” (take that as a yes).
The market at the moment is demand driven there is no doubt of that. The danger with foreign investment is that if there is a financial crisis in China there will be a sudden repatriation of capital to that country so real estate here will be dumped and the bubble will burst.

I’m note so sure about that last bit. My understanding is that a lot of this is about rich Chinese stashing money offshore because they fear or expect that something will eventually go wrong in China and they don’t plan to be around when angry mobs form and come baying for their blood (since they’re the social/political elite, communist party members who’ve been making hay while the sun shines).

It’s not so much that they’re going to be repatriating money to China at that point, though it would obviously mean the end of further Chinese real estate investment in Australia.

Well , if social mayhem breaks out in China, few will be leaving there and if they did, they may not be able to get into Australia. Just because they may own property here they are not automatically entitled to residency.
There was only one Bob Hawke.

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