Golden immigrants to buy homes as $4.4 billion of cash is freed up: Georg Chmiel
EXPERT OBSERVER
The prices of Australia's most expensive capital city homes have plummeted, according to CoreLogic, by 12.3% over the past year. That could all start to change in 2019.
That’s because nearly 1,000 very wealthy individuals who have immigrated to Australia under the Significant Investor Visa are about to have $4.4 billion in cash freed up. Many will undoubtedly choose to use it to buy a family home in their new country of residence.
The Significant Investor Visa is Australia's so-called "golden visa." It's how Australia offers citizenship to individuals who make big investments in the country. Nearly nine out of 10 Significant Investor Visa recipients is Chinese.
A total of 879 individuals and their families got their Significant Investor Visas in 2013, 2014, and 2015. Now, after four years of having their money locked up in strictly limited investment categories, they can become permanent residents. When that happens, they get their $5 million back to spend or invest however they wish. That might include in an expensive family home in Toorak or Mosman if they so desire.
They can certainly afford a high-end Australian home. Each Significant Investor Visa holder being worth an average of $50 million. Since 2,000 individuals have obtained the visa since 2013, their total net worth is about $100 billion. Adding that kind of money to Australia is like doubling the Australian Financial Review's Rich List says David Chin of Basispoint.
Juwai.com data shows that the top destinations for Chinese buyers are Melbourne, Sydney, and Brisbane. Chinese account for one-quarter of all foreign real estate investment in the country. That's more than any other nationality.
Just like well-off Australians buy homes in Bali, the UK, or New Zealand, wealthy Chinese families also buy homes in Australia. Since the GFC in 2008, this international market has boomed.
Even so, international activity alone wasn’t enough to keep prices from falling in 2018. The Significant Investor Visa program could be a boon to Australia's sagging luxury property markets.
Georg Chmiel is the chairman of Juwai, the number one Chinese website for buyers of overseas property