The number of Chinese multimillionaires looking to invest in Australia has soared under the federal government’s “significant investor visa” program.
The program started in November 2012 and is intended to encourage foreign investment into Australia by enabling wealthy foreigners to migrate to Australia if they invest $5 million for four years.
The investment must be in a complying investment which includes bonds, funds or proprietary companies but investment in apartments is not allowed under the scheme.
The Department of Immigration says over the past year it received 943 expressions of interest for the significant investor visa, of these 737 were invited to apply for the visa and 601 applications were lodged.
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At this stage about 91% of the wealthy foreigners applying have indicated an intention to invest their funds either partly or wholly in government bonds.
China multimillionaires are leading the way, with about 85.2% of applications for the visa lodged by Chinese nationals.
Victoria is the key state to benefit, with much higher numbers of the multimillionaires headed to the state.
Accounting firm KordaMentha calculates the expression of interest in the program represent nearly $5 billion of potential investment.
KordaMentha has launched the KordaMentha SIV Direct Real Estate Fund, the first in a platform of investment funds by the group to target wealthy foreigners on significant investment visas.
Berrick Wilson, managing director at Korda Mentha, told SmartCompany the significant investor visa program “certainly gained momentum” in 2013 as investors and the state and federal governments refine their processes to manage the applications.
“The program was released in November 2012 and like all of these new programs they take time to gain traction, firstly around people understanding they are available,” he says.
Wilson says there is “limited interest” at this point from the multimillionaires in investing in businesses as most are looking at “a more passive investment”.
“[The significant investor visa applicants] are looking for low volatility, the least risky option is government bonds, but it gives a very low level of return, so we are offering the opportunity to invest in investment grade commercial real estate in Australia,” he says.