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Australian Treasurer tightens foreign investment rules by forcing Chinese tycoon to sell 40 mln AUD mansion

Xinhua, March 3, 2015 Adjust font size:

Australian Treasurer Joe Hockey announced on Tuesday that he has made an order to "divest the established residential property" at a Sydney address, which he said was illegally held under the Foreign Acquisitions and Takeovers Act 1975.

Hockey said in a statement that the house, known as Villa del Mare, was purchased for 39 million AU dollars (30.4 million U.S. dollars) in November 2014. The property, at 63-67 Wolseley Road, Point Piper, in Sydney, is believed to be bought by a rich Chinese businessman.

Now the investor has 90 days to sell the mansion, according to the order.

"The property was bought illegally by Golden Fast Foods, which is ultimately owned by Evergrande Real Estate Group, a large company listed on the Hong Kong Stock Exchange, via a string of shelf companies based in Australia, Hong Kong and the British Virgin Islands," Hockey said.

"Golden Fast Foods is a foreign-owned company which failed to notify FIRB (Foreign Investment Review Board) of its intended purchase," he said.

Under Australia's foreign investment policy, non-resident foreign nationals cannot buy established dwellings as homes or investments.

"I made this order following advice from the Australian Government Solicitor that the purchase breached the Act. Under the Divestment Order I have issued today, the company now has 90 days to dispose of the property or the matter may be referred to the Commonwealth Department of Public Prosecutions."

Hockey and Prime Minister Tony Abbott last week unveiled new proposals to charge application fee for any foreign purchases of Australian residential property.

Hockey said then the proposed measures were designed to restore confidence in a foreign investment review system that had not prosecuted anyone for breaching the rules since 2006.

The Australian newspaper found out later Tuesday that the 1,500 square meter house, which features six bedrooms, eight bathrooms and a number of living areas, was sold by Christie's International Real Estate agent Ken Jacobs and local real estate agency LJ Hooker Double Bay agent Bill Malouf.

Jacobs told the newspaper that the house was bought by an Australian company on the advice of a leading accounting firm.

Local agents predicted that there will be a lengthy legal battle to fight the sale, after the purchaser took advice from a major accountancy firm to overcome potential FIRB issues.

They also warned an immediate impact on high-net-worth Chinese investors. Endi