Covid-19 bolsters interest in Australia’s Significant Investor Visa programme
With the Covid-19 pandemic bolstering Australia’s global appeal, the Significant Investor Visa programme, which has been in existence since 2012, is garnering increasing interest from further afield according to Andrew Martin of asset manager Moelis Australia.
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At a glance:
- Australia's handing of Covid-19 pandemic boosts profile from economic and wellbeing perspective
- Chinese Mainland nationals have historically been the largest source of applicants
- Of the total investment, 10% must go into a venture capital or private equity fund
- The programme is attracting long-term capital
- The government has stated that it will apply more processing resources
The Australian Significant Investor Visa has delivered almost A$12 billion of inward investment with 2,349 successful applications since its inception in 2012. While the entry level of A$5 million is higher than most other comparable schemes, the programme is generating growing interest globally.
Andrew Martin, the Head of Asset Management at Moelis Australia, the largest manager of capital under the programme, predicts further growth.
“Australia is an increasingly attractive destination for investment migrants in part due to its handling of Covid-19 from an economic and health perspective.
“Chinese Mainland nationals have long been the largest source of applicants, although declining from around 90% between 2012 and 2015 to 84% most recently.
“However, we are seeing growing interest from across the globe, particularly from Hong Kongers who have seen their share of applications rise from 3% to 5% and from South Africans, Americans and parts of Western Europe where previously there hadn’t been much demand.”
Unlike many other visa investment programmes there are stringent rules on how the funds must be allocated and it must be done through a fund so manager with a proven track record and securities license. This enables better regulation and ensures the investments are made in a way that can boost Australia’s economy and create jobs.
"Australia is an increasingly attractive destination for investment migrants in part due to its handling of Covid-19 from an economic and health perspective."
Of the total investment, 10% has to go into a venture capital or private equity fund to support growing unlisted Australian companies or start-ups, with a further 30% directed towards emerging listed companies. The 60% balancing investment can be put into corporate bonds, commercial real estate or listed equities.
In terms of the balancing investment UHNWs tend to be conservative and cautious, says Martin. “For many this is their first investment abroad or in a foreign currency.
“There tends to be two favoured options, corporate bonds, which are fairly low yielding at the moment, and core commercial real estate, such as an industrial facility with a long-term lease to a strong corporate tenant or government entity.
“However, over time as the investors gain more confidence in the market, and Australia as investment destination, they are often happy to move up the risk curve into real estate and investments with a slightly higher risk and return, but that journey takes time.”
There are clear benefits to the Australian economy and the government has stated that it will apply more processing resources.
“The programme is attracting long-term capital as it has a minimum four to eight-year horizon, and those who are moving towards permanent residency are making larger and longer-term investments in Australia,” points out Martin.
“With the capital also comes the extraordinary talent and even more potential for economic benefit,” he adds.