Are you a foreign investor eyeing Australia’s thriving commercial property market? Wondering if you qualify for a commercial loan? Here’s a comprehensive guide to help you understand the process and requirements. 

Understanding Foreign Investment in Commercial Real Estate 

Qualifying for Finance: Many foreign investors and temporary residents in Australia are eager to tap into the booming commercial property market. With government approval and the right lender, foreign investors can borrow amounts and enjoy commercial interest rates comparable to Australian citizens. 

Borrowing Limits: Banks typically don’t impose restrictions on non-resident commercial loans. Borrowing limits vary based on property value: 

• Up to 80% for loans up to $1,000,000 
• Up to 75% for loans up to $2,000,000 
• Up to 70% for loans up to $5,000,000 
• Up to 75% for land and construction costs in development projects 
• Loans from $5,000,000 to $50,000,000 are case-specific Interest-only options for up to 5 years, with full doc and low doc alternatives. Bad credit solutions are also available. 

Key Requirement: FIRB Approval 

To have your non-resident commercial loan assessed by the bank, securing approval from the Foreign Investment Review Board (FIRB) is crucial. This approval positions you to purchase various properties, from farmland to commercial development sites. 

Interest Rates Equality: Upon FIRB approval and meeting other bank lending criteria, foreign investors can access the same interest rates and borrowing limits as Australian citizens. 

FIRB Approval Guidelines 

When Is FIRB Approval Required? 

• Vacant land for development: Approval required, regardless of land value. 
• Developed commercial land: Required for values exceeding $252 million, or $55 million for ‘sensitive developed commercial land.’ 
• Agribusiness: Mandatory for transactions of $55 million or more. 
• Agricultural land: Required for transactions of $15 million or more. 

Exemptions for Some Countries: Certain countries, signatories of the Australian government’s Free Trade Agreement, have a higher threshold ($1,094 million) for FIRB approval. These countries include Chile, China, Japan, New Zealand, South Korea, the United States, Singapore, and Thailand. 

Agricultural Land and FIRB Fees 

Notification Requirement: As of December 1, 2015, foreign owners of Australian agricultural land must notify the Australian Taxation Office (ATO). 

FIRB Application Fees: 

• For commercial farm sales of $15 million or more, a non-refundable application fee of $100,000 applies. 
• Non-agricultural commercial investments face the $100,000 fee only for investments over $1 billion. 

Nationality and Non-Resident Commercial Loans 

Accepted Countries for Non-Resident Commercial Loans, Grouped by Region: 

Europe: 

• Austria 
• Belgium (may require payment of Withholding Tax in Belgium) 
• Denmark 
• Falkland Islands 
• France 
• Hungary 
• Iceland (subject to Withholding Tax Exemption) 
• Ireland 
• Malta 
• The Netherlands 
• Norway 
• Russia (subject to conditions) 
• Switzerland 
• The United Kingdom (UK) 

Middle East: 

• Bahrain 
• Iraq 
• Kuwait 
• Lebanon 
• Oman 
• Qatar 
• Saudi Arabia 
• The United Arab Emirates (UAE) 

Asia-Pacific: 

• Brunei 
• China 
• East Timor 
• Fiji 
• Hong Kong 
• India 
• Indonesia 
• Japan 
• Malaysia 
• New Caledonia 
• New Zealand 
• Papua New Guinea 
• Philippines 
• Samoa 
• Singapore 
• Tahiti 
• Thailand 
• Vietnam 

North America: 

• Canada 
• Cayman Islands 
• The United States of America (USA) 

Africa: 

• South Africa (subject to Exchange Control regulations) 
• Kenya 
• Mauritius 

South America: 

• Brazil (subject to conditions) 
• Argentina (subject to conditions) 

Additional: 

• Vanuatu 

Countries not listed will be considered on a case-by-case basis. 

Property Types and Income Proof 

Property Variety: Non-resident commercial loans cover vacant land for development, agricultural land, and existing commercial properties, offering flexibility beyond the restrictions on residential property purchases. 

Income Proof Requirements: While less strict than residential home loans, non-resident commercial loan applications may require financial evidence. Most lenders accept up to 80% of foreign income for exchange purposes. 

FAQs for Non-Resident Commercial Loans 

Sensitive Commercial Properties: These typically involve areas related to the Australian military, security technologies, communications systems, and nuclear facilities. FIRB guidelines define other sensitive areas. 

Business Visa Requirement: Non-residents seeking to run a business in Australia must apply for a Business Innovation and Investment Visa through the Department of Immigration and Border Protection. 

Tax Implications: Non-resident investors should be aware of the Australian government’s goods and services tax (GST) on commercial property transactions. Consult the Australian Tax Office (ATO) and financial professionals for guidance. 

Why Invest in Australian Commercial Property? 

According to the Reserve Bank of Australia (RBA), around 25% of major commercial property purchases involve foreign investors. Many choose commercial real estate for predictable rental income and low correlation to other assets. Chinese investors, particularly active in New South Wales, contribute significantly to Australia’s commercial property landscape. 

In summary, non-resident commercial loans offer foreign investors a pathway to leverage Australia’s lucrative commercial real estate opportunities. Understanding FIRB requirements, borrowing limits, and property types ensures a seamless investment journey.