India's wealthy, from old money to nouveaux riches IT entrepreneurs,
are quietly snapping up hotels and mines Down Under just as Australia
embarks on an immigration campaign to attract long-term investment.
The Jindal family, ranked among the world's top 80 richest by
Forbes, in May bought two minor stakes, worth a total of $26 million,
in Australian iron ore and coal mines through Jindal Steel & Power.
That followed a US$2 billion purchase by Indian self-made
billionaire and college-dropout Gautam Adani of a coal mine in the state
of Queensland last year.
Silverneedle Hospitality, a company backed by Nadathur S.
Raghavan, an Indian philanthropist and co-founder of software company
Infosys Technologies, just bought a hotel in Brisbane for $57 million.
Last year, it bought a chain of about 60 hotels in Australia and New
Zealand for an undisclosed sum.
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"In the last six to nine months, there has been a lot of
private investment into Australia because it is seen as a safe-haven,"
said Paul Dowling, principal analyst at banking research firm East &
Partners.
While Indian nationals have traditionally favoured Britain
and North America as offshore investment destinations, private wealth
bankers have noticed a growing demand for Australian real estate,
particularly hotels and serviced apartments.
This comes as no surprise to Singapore-based Paul Guest, head
of research and strategy at LaSalle Investment Management, as
commercial property prices in Australia are very attractive.
With a forecast of about 10 per cent per year, he said total
returns in Australia are the highest in Asia, topping Japan's 9 percent
and South Korea.
Also underpinning demand is Australia's relatively strong economic performance compared with Western peers.
Indeed, Australia is one among a select club of only eight
nations that can still boast a pristine triple A rating with a stable
outlook.
Dubbed the lucky country for its abundance of natural
resources, white sand beaches and kind climate, it is now entering its
21st year of uninterrupted annual growth, having dodged a recession
after the 2008 global financial crisis.
Attracting rich
This year, Australia will overtake Spain as the world's 12th largest economy, despite being 52nd in terms of population.
This explains the massive increase in Australia's foreign
direct investment which leapt to $67 billion in 2012, nearly double the
previous year, according to government statistics.
Still, private investment from India, a country that produces
millionaires every day, would appear to lag that from others such as
China.
Analysts reckon China is leading the pack though the
Australian government does not keep statistics on direct investment by
nationality.
For Arjuna Mahendran, head of Asian investment strategy at
HSBC's private bank in Singapore, the lag is due to a general perception
in India that Australian incentives are not as generous as those of
other countries.
That is one reason the Australian government will next month
launch a "significant investor" visa programme, with the aim of
competing with New Zealand, Canada and Singapore in attracting a growing
number of Asia's rich.
India is home to more than 7,000 millionaires whose fortunes
amount to nearly $US1 trillion, data from global wealth intelligence
firm Wealth X shows.
Combined with $US465 billion held by Indian nationals living
outside their home country, the total is roughly equivalent to the size
of Australia's entire economy.
Analysts speculate that within five years, India could have pumped as much as $US30 billion into Australia.
The new Australian visas will target individuals who invest
at least $5 million in certain assets, such as infrastructure government
bonds, in return for concessions on the usual migration requirements
including qualifications and English skills.
Such immigration schemes tend not only to bring much-coveted
long-term investment, but also contribute to economic growth and job
creation.
Indian nationals seem well-placed to benefit from the
programme. India has become Australia's biggest source of migrants,
including a large number of IT entrepreneurs.
"Many of them are very interested in exploring the path to
permanent residency," said Mark Wright, immigration leader partner at
Deloitte Australia.
