Victoria has emerged as the focus for overseas buyers of Australian homes, attracting 44 per cent of residential purchases by foreign investors last financial year.
NSW, with 32 per cent of residential home purchases, was the second most popular state for an inflow of foreign property investment, according to the Foreign Investment Review Board’s 2015-16 annual report, published yesterday.
Foreign investment approvals across all sectors jumped to $248 billion in the year, a 29 per cent rise on the previous year.
This included the sale of NSW electricity distribution network TransGrid for almost $10.3bn to a consortium including the Abu Dhabi Investment Authority, a Canadian pension fund and local infrastructure funds.
China was the largest source of foreign investment approvals. It invested $47.3bn in Australia last year. The US, with $31bn invested, was the second-largest source country, followed by the Netherlands ($16.5bn) including Shell’s takeover of BG Group, Canada ($15.7bn) and the United Arab Emirates ($6.7bn).
Property, combining commercial and residential real estate, was the biggest drawcard for foreign investment, attracting $122bn.
The value of approvals for Chinese investors in real estate rose 31 per cent. Chinese investors bought the largest slice of the property action last year, valued at $32bn, the FIRB said.
The data also covered a record high of $4.6bn of farmland sold in 257 FIRB-approved foreign transactions, up from 77 approvals for $2.5bn of agricultural land and agribusinesses the previous year.
The US was the biggest agricultural investment source. It spent nearly $1.3bn buying farms.
Chinese investors, who spent $996m, were the second largest buyers of Australian farmland in 2016, led by the $280m purchase by Moon Lake Investments of Australian’s largest dairy farming business, Tasmania’s Van Diemen’s Land Company.
Another $240m was invested by Canadian companies, led by its largest pension fund, the Public Sector Pension Investment Board, which spent nearly $100m to buy five Queensland cattle stations as part of its joint venture with the local Hewitt family.
In early 2015, FIRB’s agricultural land screening threshold was lowered from scrutinising only rural property purchases worth more than $252m each to any foreign company or individual investing more than $15m in Australia’s agricultural land, capturing an additional 110 proposals valued at $1.4bn in 2015-16.
The report says that throughout 2015-16, the sale of the Kidman cattle empire, covering 1.3 per cent of Australia’s land mass, led to several purchase applications being assessed by FIRB. Two separate purchase applications involving Shanghai Pengxin and its Dakang Australia entity were vetoed by the Treasurer as not in the national interest.
The report says a joint Gina Rinehart-led venture, one-third funded by Chinese property investor Gui Guojie and his Shanghai CRED company, and two-thirds by Rinehart’s Hancock Beef, made a successful application in October last year to buy the S. Kidman group for $386m, although these figures are not included in the report.
A total of $72.4bn in residential real estate investment was approved in the year, in 40,149 applications, a 19 per cent increase in the value of approvals from the previous year.
The high level of foreign investment in Victoria put the state under the investigative spotlight, attracting almost half of FIRB’s residential property compliance probes. A third of investigations focused on NSW.
Of about 2100 cases identified for investigation, 260 investors were found to have breached the rules and divestments were required in 39 cases.
Housing made up 29 per cent of approvals by value. Electricity, manufacturing and gas made up 23 per cent and agriculture, forestry and fishing 2 per cent.