Foreign Investment

Can I buy Australian Property?

If you are an overseas investor looking to move to Australia and purchase Management Rights or a Hotel, you should familiarise yourself with Australia's foreign investment policy. The two most significant regulations are that:

1. Acquisitions of real estate in Australia by foreign interests require prior foreign investment approval.

2. All contracts of sale to acquire real estate in Australia by foreign interests must be made conditional on foreign investment approval and must allow at least 30 days for a decision to be granted.

The following is a very brief overview of the Governments foreign investment policy in relation to Hotel and Resort real estate acquisitons. A detailed policy can be found at the Foreign Investment Review Board web site www.firb.gov.au

Designated Strata Titled Hotels

Foreign acquisitions of strata-titled hotel rooms in designated hotels will be permitted without the need for foreign investment approval where each room is subject to a long-term (10 years or more) hotel management agreement. For a Hotel to be designated under this category, it must satisfy the following criteria:

1. The Hotel must provide a full range of in house facilities consistent with industry accepted Hotel features;

2. all the rooms within the Hotel must be subject to the Hotel management agreement;

3. The hotel management agreement must provide that the owners rights are restricted to receipt of an income stream, not occupancy. In addition, owners must not have the right to opt out of the management agreement;

4. ownership rights to the common property within the hotel must be held by the Hotel manager.

Intergrated Tourist Resorts

Acquisitions of residential real estate within a resort which has been designated by the Government as an Integrated Tourism Resort (ITR) prior to September 1999 are exempt from the normal foreign investment restrictions applying to foreign acquistions of residential property and can be on sold to foreigners without approval.

For resorts designated as ITRs from September 1999, the exemption only applies to developed residential property which is subject to a long term (10 years or more) lease to the resort/hotel operator, making the property available for tourist accommodation when not occupied by the owner.

1. All other property, including vacant land for development, within the ITR would be subject to the normal foreign investment restrictions.

2. Operators of ITRs are required to report annually to the Board providing details of the ownership of all accommodation within the resorts.

To be considered for designation as an ITR, a tourist development must satisfy the following criteria;

1. be a destination tourist development on a contiguous site normally covering a minimum of 50 hectares within well defined boundaries and be planned and constructed by a single developer;

2.have an existing core hotel of sufficient size and standard to provide the central focus for the resort and to provide about 20 per cent or more of the ITRs total accommodation;

3. have 'non-hotel' accommodation facilities within the boundaries of the resort;

have extensive recreational facilities (such as golf course, tennis courts, swimming pools, walking tracks ect) within the boundaries of the resort.

All proposed acquisitions of Hotels and Motels must be submitted for examination. Developments which are clearly and primarily destination tourism resorts with a residential component may be considered for designation as ITRs. However, developments which are substantially residential in nature, even though they may have a tourism component, would not qualify for designation as ITRs. Generally, it is expected that a destination tourism resort being considered for ITR status will have commercial (including the core hotel) and recreational facilities accounting for about 70 - 80 per cent of the resorts area.

Hotels and Motels

However, Hotel and Motel businesses operating (or to be operated) under one title are normally approved (unless considered contrary to the national interest) under the Tourism Sector policy (details available in the Summary of Australia's Foreign Investment Policy). Other accomodation facilities such as guesthouses, holiday flats, and undesignated strata titled hotels and motels are examined under policy applying to the residential real estate sector.

How do I apply?

The Foreign Investment Review Board is unable to give 'in principle' approval to persons wishing to acquire property, so an application for foreign investment approval must specify the particular property to be acquired.

Electronic lodgement of straightforward residential real estate applications should be made through the FIRB website or write to:

The Executive Member

Foreign Investment Review Board

Department of Treasury

Langton Crescent

CANBERRA ACT 2600

AUSTRALIA

Ph: (+61)2 6263 3795

Fx: (+61)2 6263 2940

Web: www.firb.gov.au

Email: firb@treasury.gov.au

further information and frequently asked questions can be found at: