Are foreigners allowed to invest by directly purchasing a commercial real estate asset?
Yes, however the Foreign Acquisition and Takeovers Act 1975 (Cth) (FATA) sets out the requirements associated with foreign investment in Australia. The FATA regime is administered by the Federal Treasurer and the Foreign Investment Review Board (FIRB).
The Commonwealth's stated approach to foreign investment is to encourage it consistent with Australia's national interest. Proposals concerning acquisition of an interest in Australian land requires notification to, and approval by, FIRB if the value of the interest being acquired exceeds prescribed thresholds.
Any acquisition of commercial real estate by an agreement country investor (currently being a non-government entity from the USA, New Zealand, Chile, Japan, the Republic of Korea and China) will be subject to a threshold of AUD1,094 million. Acquisitions of such land by a foreign person which is not an agreement country investor or a foreign government will be subject to a AUD252 million threshold unless the land is characterized as ‘sensitive’ in which case an AUD55 million threshold will apply. These lower thresholds also apply to Australian special purpose vehicles established by agreement country investors for the purposes of making the investment.
An interest in Australian land includes acquisitions of an interest in a share in an Australian land corporation and a unit in an Australian land trust.
The above mentioned thresholds are indexed annually on 1 January.
In the case of vacant land and residential land (as well as acquisitions by foreign government entities), the threshold is zero and accordingly all acquisitions of such land or by such entities require approval by FIRB.
A foreign person includes:
Australian land is broadly defined and includes all agricultural land, commercial land, residential land and a mining tenement or production tenement situated in Australia.
