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The Australian Financial Review - Online Rich migrants tipped to lift sales at the top end

Tim Binsted

Expectations of a spike in demand for top-end property are mounting as wealthy migrants start arriving on the federal government’s significant investor visa (SIV).

The visa, which came into effect in November, allows migrants who invest $5 million or more in complying investments to in effect buy residency.

Vagaries around what constitutes a complying investment were a source of frustration for local wealth managers keen to profit from the program before its introduction, but it was always clear that direct property purchases were not on the list.

Regardless, real estate agents rubbed their hands in anticipation of the flow-on effect on the premium property market of SIV migrants in search of homes. The first signs of that effect are appearing.

“There’s been an uplift in regards to who I deal with as Asian-based vendors and developers look to migrate,” says Knight Frank director of residential Andrew Swinson.

“People really see this [SIV] as the golden ticket to get into Australia.”

Swinson says Knight Frank’s global wealth report consistently shows that buying a residential property is first on the list for rich individuals looking to migrate.

A spokesperson for the Immigration Department says no visas have been granted yet, but 231 expressions of interest had been lodged by January 31 and 85 invitations to apply have been issued.

As predicted, interest is concentrated on the east coast, with 37 of the issued invitations for NSW, 32 for Victoria and 12 for Queensland.

While the first visa is yet to be finalised, the residential property market, as a leading indicator, suggests momentum is gathering.

CBRE residential director Ben Stewart highlighted a sale, concluded on February 15, in excess of $5 million at the Residence overlooking Hyde Park, and a $9.2 million deal in Balmoral at the end of last year. Both were Asian buyers migrating to Australia, as is an interested party Stewart is negotiating with on a penthouse.

“We’ve seen a real spike in sales and inquiries in the last two weeks with Chinese New Year . . . [the SIV] stimulates things and gets big transactions going; anything over $5 million has been patchy recently,” he says.

Wealth managers, accountants, lawyers and immigration consultants have been swarming a series of conferences and seminars in a bid to inform and attract potential visa applicants.

Morgan Stanley Wealth Management is holding discussions with about 100 prospective SIV clients as it looks to capitalise on its presence in major Asian cities including Singapore, Hong Kong, Beijing, Shanghai, Jakarta and Taipei.

“We have an extensive prospect list and have already signed up a handful of people,” says vice-president Stephane Cooper.

“I’ve been surprised by the sheer momentum that’s building around this thing [and] the number of people actually involved at high levels at accountancy firms and banks. It’s probably going to be bigger than people might think.”

AIMS Financial Group, which has already attracted close to $1 billion in investment from China in Australia and Singapore, is marketing two Australian property investment funds to potential SIV candidates.

AIMS chairman and chief executive George Wang says his team is utilising its distribution network in China and working with immigration agents and mainland Chinese banks to market the funds.

“A lot of clients want immigration and property is a more attractive asset to the Chinese. At the moment we have 50 people close to investment.”

Financial liberalisation is relatively new in China, which means there is small range of financial products and considerable uncertainty about the sharemarket, leaving property as the asset class of choice for many Chinese.

Wealth managers say about 7000 business migration visas are granted every year and that SIV applications will take precedence. If only a fraction of those 7000 are granted to SIV migrants, the impact on the Australian market will be tangible.