Australian law and policy – August 2013

October, 2013

Foreign investment in Australian property – a step towards a more open approach

As a general rule, foreign investments in Australian urban and rural land must receive the prior consent of the Foreign Investment Review Board (FIRB).  Under The Foreign Acquisitions and Takeovers Act 1975 (Cth), the Treasurer may unwind acquisitions and impose heavy fines in respect of transactions that proceed without the approval of the FIRB.

In a recent and much welcomed move, the FIRB has relaxed its rules in respect of Australian Real Estate Investment Trusts (A-REIT).  From now on, private foreign investors will not be required to notify the FIRB if they acquire passive interests in A-REIT provided that their assets consist predominantly of commercial, industrial and retail property.

This is a small progress.  The exemption’s thresholds are 10% of units in a listed trust and 5% of units in other public trusts.  However, there are some (limited) cases in which even acquisitions below the relevant threshold will not be considered “passive interests”.

In any event, this reform will allow foreign investors to gain easier access to a market which has consistently outperformed the Australian domestic equity market in recent years and which will most likely continue to offer relatively secured income streams in the near future.

The Corporate Advisory team at Mills Oakley can help you in:

–  determining whether you fall within the FIRB exemption;
–  identifying investments in Australia;
–  reviewing unit trust documentations; and
–  for more significant investments, helping you obtain the consent of the FIRB.

Contact Mills Oakley

warren-scott

Warren Scott | Partner
T: +61 3 9605 0984
E: wscott@millsoakley.com.au

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