Basic Tips for Foreign Investment in Commercial Real Estate
If you are not a citizen or permanent resident but might want to invest in the Australian commercial property market, you may need to be aware of the rules and conditions around foreign commercial property investments well in advance. Of course, it’s also important that you familiarise yourself with the Australian property market in general, in order to make the best investment decisions for your circumstances. Here is some basic information about foreign investment in Australian commercial real estate from the Foreign Investment Review Board (FIRB).
Types of commercial real estate
There are basically two broad categories of commercial real estate property. The first refers to developed properties such as factories, offices, warehouses, retail outlets, restaurants, motels, hotels and guesthouses, or a unit within a hotel that is rented out as part of the hotel’s business.
A residential home that is privately rented to tenants is not considered to be commercial, nor is a unit within a hotel that is owner-occupied or rented out privately. Both of these are considered to be residential (the rules around residential properties differ from those around commercial when it comes to foreign investment).
The second category is land to be used for commercial purposes, such as the building of a factory, warehouse, shop, office, or other business building.
Australian foreign investment rules
As a foreign investor, you may need to apply to the federal government if you wish to invest in developed commercial real estate that is valued at $55 million or more, or valued at $5 million or more if it is heritage listed.
According to the FIRB website, exemptions include:
For commercial vacant land investments, you may need to apply regardless of the land’s value. These investments are subject to certain conditions, such as the commencement of development within five years (subject to changes – check FIRB website).
Information you may need for your application
Of course it’s also important to engage a professional commercial property management service for any Australian commercial real estate you invest in, to ensure the property is well-maintained, and that commercial leases are properly managed.
This is general information only. If you are a foreign national and wish to invest in Australian property, you should get sound legal advice before going ahead. It’s also helpful to work with experts in commercial property investments in the Australian market, such as the team from Burgess Rawson.