By James Alan Hall
Migrants from Asian countries, especially fast-growing economies like Vietnam, have always had a strong passion for real estate. There is a strategy that allows residential property to become part of the journey for migration to Australia despite the country not having any residential property investment based visas.
Australia is a highly desirable location that often ranks in the top 10 in quality of life and most liveable cities, and has achieved 27 years of unbroken growth despite global recessions and financial crisis. Yet a drawback of the migration program is that there are no options for investment in residential real estate as the basis of a pathway to migrate to Australia. However, with a well-planned strategy it is possible to obtain permanent residence in Australia based on property. This strategy is based around using property development as a business instead of a passive property investment.
The Australian business migration program is divided into three categories associated with different kinds of applicants – business owners, investors and entrepreneurs. Each category has two options – one with low entry requirements and another with higher entry requirements but fewer restrictions. The business owner and investor pathways are of interest for this article.
THE 188 INVESTOR VISAS
The lower requirement investor visa is the Subclass 188 (Investor), referred to as 188B, which requires an investment to be made in an Australian government bond of $1.5 million Australian dollars for 4 years. The higher requirement investor visa is the Subclass 188 (Significant Investor Visa), referred to as 188C or SIV, which requires an investment to be made in a structured investment that totals AU$5 million. This structure includes a managed fund of AU$3 million that visa applicants can invest in property, but residential real estate is limited to 10 percent and therefore cannot be the basis of this visa.
The lower requirement business owner visa is the Subclass 188 (Business Innovation), referred to as 188A, which requires the visa applicant to have experience owning and managing a business with a turnover equivalent to AU$500,000 annually. This would typically be the business the applicant is currently managing in their home country.
The three pathways above are all two stage processes – the visa applicant first obtains a temporary residence visa and is required to meet requirements for permanent residence, which include stay periods in Australia and investment or business targets in Australia. After at least 2-4 years have passed, an application for permanent residence can be made.
THE 132 INVESTOR VISAS
Unlike the 188 visas, the higher requirement business visa, Subclass 132 (Business Talent), referred to as 132A, allows the applicant to apply directly for permanent residence. This visa requires the applicant to have experience owning and managing a business with a turnover equivalent to AU$3 million. The permanent residence visa is granted with an obligation to maintain a substantial ownership interest in, and direct and continuous involvement in the day-to-day management of a business in Australia, and these obligations are monitored for the first 3 years in Australia.
It is through this business, to comply with the ongoing obligations for business ownership and management in Australia, that a property development business can be established. There are developers and financial advisory firms that will provide a business solution to assist in establishing and supporting a business that meets these obligations. This will usually include provision of suitable land, arranging building contractors, architectural designs, business plans and all other required details including licensing, approvals and permits. Ongoing support through the eventual sale of the properties in the development will usually be provided.
With the high level of support available it is generally not a requirement for the visa applicant to specifically have experience in construction or property, but rather introduce a high level of business acumen and skill to assist with the business operations gained through their previous business management experience. Further, the management responsibilities can be shared with up to three separate visa applicants supporting the same business in Australia. This can allow for larger developments with higher profit projections. The capital investment in the business is usually between AU$1 million to AU$2 million. An added bonus is fluency in English but is not required.
One example of a project is a planned development in Queensland of a piece of land into more than 80 town houses over a 3-year period. The project involved three separate visa applicants from Vietnam, each contributing between AU$1,5 million and AU$2 million. With the resulting creation of employment and the large scale of the project this was welcomed by the Queensland state government who supported the application for each of the three applicants. All the visa applicants have been guided by a skilled partner with experience in the business of property development who can effectively manage risks associated with property developments in the interests of the investors.
With a good management team in place, and a system to allow direct involvement in management decision making, the visa applicant can even remain in their home country while still meeting the business obligations of this permanent residence visa.
For those visa applicants in a position to pursue this pathway, this is a unique proposition. It is important to understand the full details of this visa, in addition to the requirements of the particular state or territory government where the property development business will operate. Your registered migration agent will be able to guide you through this journey, so do check www.mara.gov.au to ensure you’re dealing with a registered migration agent.