Australia clamps down on illegal foreign housing investment
Mar. 04, 2015
CANBERRA, Australia (AP) — Australian authorities are clamping down on wealthy foreigners illegally buying real estate, ordering a Chinese billionaire to sell a Sydney mansion he recently bought for $30 million, a minister said on Wednesday.
The billionaire, Hui Ka Yan, 56, is chairman of Hong Kong-listed real estate developer Evergrande Real Estate Group, which is based in Guangzhou, China. He is listed by Forbes as China's 15 wealthiest person with a fortune of $6.4 billion.
The government on Tuesday ordered Evergrande subsidiary Golden Fast Foods to sell a Sydney Habor-front mansion known as Villa del Mare within 90 days. The company bought the Mediterranean-style property in the exclusive Potts Point suburb in November.
The government said the acquisition was illegal because Golden Fast Foods, which is owned by Evergrande through a series of shelf companies in Australia, Hong Kong and the British Virgin islands, did not inform the Foreign Investment Review Board it intended to buy it.
"It is hugely important that we have integrity in our foreign investment regime," Treasurer Joe Hockey said Wednesday. "Wherever people believe that there has been unlawful behavior in relation to foreign investment, we want to know about it."
It is the first such divestment order issued in Australia in at least seven years and is attempt by the government to negate anger over sky high real estate prices in Sydney, some of which is due to foreign investment. The company could face prosecution.
"If it's sold at a profit, the owner gets to keep the profit," Hockey said of the forced sale. "If it's sold at a loss, it sounds as the though the owner has the capacity to absorb some of it."
Hockey said that other properties were under investigation. Phones at the regulator, the Foreign Investment Review Board, were running hot with tips on Wednesday in response to the Villa del Mare order, Hockey said.
The regulator's resources were being beefed up to cope with the extra workload, he said.
Foreigners are allowed to buy new homes, but generally aren't allowed to compete with locals in the market for existing homes unless they are Australian residents.
But wealthy investors, many from China, are accused of sidestepping these restrictions by buying through Australian lawyers or shelf companies.
The regulator has shown little interest in investigating such accusations in recent years. But an extraordinary increase in real estate prices in Sydney has put political pressure on the government to remove the competition.
"We're not going on a witch hunt," said Hockey. "We definitely don't want to create an atmosphere of xenophobia."