Govt policies deter HNW foreign investors from Australia
Australia’s Investor Visa is losing its appeal due to the high-risk profile of investments caused by policy changes, meaning private banks in Australia are having to work harder to compete in countries with more favourable immigration conditions, according to consulting firm, GlobalData.
Where investments of at least $5 million into complying investments such as mutual funds, equities, and bonds for a minimum period of four years was required previously, Investor Visa applicants now had to invest $1.5 million in Australian Securities Exchange (ASX)-listed funds, and a further $500,000 of the total in eligible Australian venture capital (VC) or growth private equity funds.
GlobalData senior wealth management analyst, Heike van den Hövel said most of the 11,850 high net wealth (HNW) investors in Australia stemmed from the UK or Asia-Pacific regions, with Chinese investors leading the more recent migration flow. Van den Hövel has called for market-targeted programs for Chinese investors designed to maximise “lucrative” opportunities for the Australian economy, and touted current Government policy around the visa as inflexible.
“The government is unlikely to relax visa conditions, so the onus is on banks to counteract the trend of falling HNW migrant numbers,” she said.
“To achieve this, they should focus on lower-risk investments within a high-risk asset class.
“HNW migrants from Asia-Pacific have a much lower appetite for risk than Australian HNW investors. For example, investors in the latter country allocate the bulk of their wealth to equities, while deposits and property dominate in China.”
van den Hövel said a sustained engagement and education campaign would be needed to continue to attract HNW migrants to the visa program, and said a lack of understanding was a key deterrent for better policy support of non-conventional investments.
“Private banks just have to understand the unique investment and risk preferences of this segment and adjust their targeting strategy accordingly,” she said.
“HNW expat flow may have reduced, but the opportunity is still there.”
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