Commercial real estate includes vacant and developed property
which is not for residential purposes. A foreign person wishing to
purchase commercial real estate in Australia needs to be aware that
certain restrictions may apply.
'Foreign Person' is defined under Section 5 of the
Foreign Acquisitions and Takeover Act 1975 (Cth) to mean
'a natural person not ordinarily resident in Australia'.
However, the definition also includes:
a corporation in which one or more 'foreign persons' or
a foreign corporation hold a controlling interest;
the trustee of a trust estate in which a 'foreign
person' or a foreign corporation holds a substantial
the trustee of a trust estate in which two or more 'foreign
persons' or a foreign corporation holds an aggregate
A person is considered to hold a 'substantial interest'
if that person controls 15% or more of voting power or holds a 15%
or more interest in a corporation. Two or more persons are taken to
hold an 'aggregate substantial interest' if they together
control 40% or more of the voting power or hold a 40% or more
interest in a corporation. Either a substantial interest or an
aggregate substantial interest is taken to be a 'controlling
Developed Commercial Real Estate
Developed commercial real estate includes offices, warehouses,
factories, restaurants, shops, hotels, motels, hostels, guesthouses
and any individual dwellings within those properties. A foreign
person is not required to seek approval from the Foreign Investment
Review Board (FIRB) if the developed commercial
property to be purchased is valued below the applicable monetary
threshold set out in Australia's Foreign Investment Policy
Under the Policy, the monetary threshold for foreign persons
acquiring developed commercial properties as at 1 January 2011 is
A$50 million. The threshold is A$5 million if the property is
Monetary threshold for United States investors acquiring
developed commercial properties as at 1 January 2011 is A$1005
Foreign persons are permitted to purchase developed commercial
properties valued above the monetary threshold if approved by FIRB.
FIRB will normally grant approval for the purchase unless the
approval is deemed to be contrary to the national interest.
Commercial Real Estate For Development
Foreign persons acquiring vacant properties for commercial
development must obtain approval from FIRB regardless of the
purchase value. FIRB will normally approve the development subject
to the following conditions:
continuous construction commencing within five years; and
a minimum amount equivalent to 50% of the acquisition cost or
current market value of the land (whichever is higher) being spent
An Australian citizen or permanent resident living overseas is
exempt from applying to FIRB for approval to purchase commercial
Regardless of the foreign person's citizenship or residency,
FIRB approval is not required if the person is acquiring property
by will or by operation of law (such as a court order regarding the
division of property in a divorce settlement).
No approval will be required for acquisition of property from
the Commonwealth, State or Territory or a local government, or a
statutory corporation formed for a public purpose.
A foreign person is not required to obtain approval for
purchasing developed commercial real estate where the property is
to be used immediately, in its present state, for industrial or
non-residential purposes. The acquisition must be wholly incidental
to purchaser's proposed or existing business activities.
For assistance in making an application for FIRB approval to
buy commercial real estate or further information generally please
contact Maria Ho, Partner in the Corporate and Commercial team on
8210 1274 or firstname.lastname@example.org.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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