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The forced sale of a $39 million Sydney mansion connected to a Chinese billionaire has won approval from a China-focused property group.
Treasurer Joe Hockey announced earlier this week that Golden Fast Foods would have to offload the property it purchased in November 2014 because it was acquired “illegally”.
Ausin Group managing director Joseph Zaja welcomed the federal government’s enforcement of foreign investment rules, which he said was “long overdue”.
“It is an extraordinary measure to use a sale of this magnitude to set an example for the industry,” Mr Zaja said.
“The forced … sale is a starting point and needs to be followed through for all illegal sales no matter what the size.”
Golden Fast Foods is ultimately owned by Evergrande Real Estate Group, which in turn is owned by Chinese billionaire Xu Jiayin.
Mr Zaja said although Ausin understands why the government recently proposed to reform the foreign investment regime, it had to be careful not to discourage law-abiding inevstors.
“If the new changes are not properly resourced and explained, the government runs the risk of damaging our international reputation as welcoming foreign investment,” he said.
Juwai, a listings portal for China-based real estate investors, also expressed concern at how Chinese buyers would view Australian government policy.
Co-chief executive Simon Henry said the Golden Fast Foods divestment order had caused a “sharp intake of breath” among investors.
“Chinese buyers, especially at the high end, will pause and wait to see what the government does next,” Mr Henry said.
“If nothing else happens, this incident might be forgotten. If the government continues its unpredictable behaviour, premium buyers may reconsider their desire to purchase in Australia.”
Mr Henry said what had spooked investors was that the divestment order seemed to come out of the blue and was made against a high-value property.
“At the lower end of the market, this also could create uncertainty. Some wonder, if such a wealthy buyer can be treated this way, what risks are less-wealthy buyers running?” he said.
[Related: Real estate rules being breached with impunity, says REINSW]
- <p>If this was an illegal sale, what of the recipient of the $39 million? Presumably, they have washed their hands of it, having benefited from a buyer who had no right to buy. Likewise the agent who has charged commission for an illegal sale.<br>The next question is what if the next sale is at $45 million? Does the foreign buyer keep the profit? Can the foreign buyer use the same agent they bought through, who repeats a commission thanks to an illegal sale.<br>I think we are about to find out how well thought out the FIRB legislation is.</p>0
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