Reason ‘sensitive’ foreign investor approvals are on hold by Australia
Prime Minister Anthony Albanese triggered the federal election on Friday March 28. Picture: Jason Edwards / NewsWire
Australia has put in force a hold on approval of ‘large or sensitive’ foreign investment proposals to buy into commercial and residential real estate – figures dominated by the US.
The timing of the hold – coming just days ahead of US president Donald Trump announcing wide-ranging tariff measures against the rest of the world, including Australia – is purely coincidental.
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Commercial investment proposals approved by FIRB in Q1 24-25. Source: FIRB.
Data from the latest FIRB quarterly report. Source: FIRB.
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The Foreign Investment Review Board has advised it is now working under “caretaker period” rules, with the House of Representatives dissolved ahead of the May 3 federal election.
“Caretaker conventions will apply until the election results are clear or, if there is a change of government, until the new government is in place,” an FIRB statement said.
Americans make up the biggest chunk of foreigners applying for Foreign Investment Review Board approval of commercial investment proposals – of which the biggest segment by far is commercial real estate.
Official data shows American proposals dominate FIRB approvals with the 2023-24 year seeing $65.7 billion worth of buy-ins grants – which was three times as much as the closest applicant Japan that was on $20b for the year.
Law firms have been advising clients since January of the shutdown with MinterEllison Melbourne-based partner Alberto Colla stating in an update that “low-value, routine applications continue to be approved during the caretaker period, but approval for more complex applications could be delayed by 1–2 months once the election is called”.
Americans are by far the biggest commercial investors FIRB deals with, including applications like the purchase of the 211,664ha Bellevue Station on the Mitchell River near Chillagoe by a US buyer for a reported $40m.
He said “caretaker mode has specific implications for FIRB purposes in that, once the election is called, FIRB applications will not be processed until the outcome of the election is known. The caretaker period is generally four to six weeks in duration.”
But he warned “if the election result is close and there is no clear majority, or if there are delays in counting and declaring results, the caretaker period could be extended”.
US commercial buy-ins across Australia doubled during the year compared to 2022-23 when it notched approvals worth $34.7b total.
Those numbers were on track to be smashed this financial year, given the first quarter of July to September alone saw the US hit $22.9b in investment approvals in Australia under FIRB.
The Foreign Investment Review Board said “certain conventions apply for making decisions” now, but specifically for any major foreign investment proposals.
Approval commerical investment proposals data from FIRB. Source: FIRB.
“Most foreign investment proposals are treated as part of ongoing government work and are not affected by caretaker conventions. However, some proposals that are large or sensitive might be treated as major policy decisions and managed in accordance with the conventions.”
“This is decided on a case-by-case basis,” the statement said.
“If you have a major or sensitive proposal you haven’t submitted yet, contact Treasury to discuss it,” it said. “If your proposal is already being reviewed, Treasury will contact you if the caretaker period affects your case.”
The five week hold comes after the caretaker period was triggered on March 28 when Prime Minister Anthony Albanese asked the Governor-General to call a general election.
Of the 377 commercial investment proposals approved in the first quarter 2024-25, 143 were from Americans with their value making up almost half of the total approvals $22.9b of the
$46.6b total.
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