Over the last 18 months or so each notification to Australia’s Foreign Investment Review Board (FIRB) of a proposed acquisition of agricultural land by a foreign person has been met with requests from FIRB for increasing levels of detail regarding the marketing campaign undertaken in relation to the land, the extent to which potential Australian purchasers had an opportunity to bid for the land, and how the proposed foreign investor was chosen as the successful bidder.
On 1 February, this trend has culminated in the announcement of the Australian Government’s formal policy and guidelines which will be applied to FIRB’s consideration of each proposed acquisition of agricultural land by a foreign investor.
Going forward, foreign investors will (subject to exceptional circumstances) need to demonstrate that agricultural land they intend to acquire has been part of a public sales process and marketed widely to potential Australian bidders for a minimum of 30 days, and Australian bidders have had an opportunity to participate in the sale process.
As a result, foreign investors will need to demonstrate to FIRB how they became aware that the property was advertised for sale and whether the acquisition was subject to an open and transparent sale process.
This means in order for a sale of Australia agricultural land to a foreign investor to be approved by FIRB, real estate agents, vendors and foreign investors alike will need to ensure that:
- public marketing/advertising was undertaken for the sale of the property, using channels that Australian bidders could reasonably access (e.g. advertised on a widely used real estate listing site or large regional/national newspaper)
- the property was marketed/advertised for at least 30 days and
- there was equal opportunity for bids or offers to be made for the property while still available for sale.
Finally, the Australian Government’s recent announcements also provide that all acquisitions of agricultural land by foreign investors for residential development will also be subject to standard development conditions requiring development to commence within a five year period to prevent land banking. This condition already applies to acquisitions of vacant land.