Hong Kong investor acquiring a Melbourne retail asset

The situation

This is an anonymised composite reflecting a recurring pattern, not a specific settled transaction. A Hong Kong-based private investor, with an existing portfolio of commercial property across Asia, identifies a well-tenanted retail asset in Melbourne and wants to finance a majority of the purchase price through an Australian lender rather than paying cash.

Why it's hard

As a foreign person, the acquisition requires FIRB approval, and the foreign purchaser surcharge on transfer duty adds a material cost the investor needs to factor into the total acquisition budget.⚠ Many banks are also reluctant to lend against overseas-sourced deposit funds and income without extensive verification, which can slow a transaction down considerably if not anticipated from the outset.

How it can be structured

A commercial property loan from a lender experienced with foreign investors is the standard path, assessed against the retail asset's tenant quality, lease terms and weighted average lease expiry, generally at a somewhat more conservative loan-to-value ratio than a domestic borrower would receive, reflecting the additional verification involved; the exit is ongoing servicing from the property's rental income. FIRB approval is generally sought in parallel with the finance application, since neither process is dependent on the other completing first, though settlement should not be scheduled until FIRB approval is confirmed. Where the investor's income is sourced overseas, providing clear, translated and, where relevant, independently verified documentation of that income upfront reduces delays considerably compared with providing it only once requested.

Because the property's income depends heavily on its existing tenant, lenders will typically request the current lease in full, checking for any options, rent review mechanisms, or early termination rights that could materially change the income position within the loan's term. Where the investor's deposit funds originate from an overseas bank account, providing a clear, documented source-of-funds trail early in the process, rather than only once requested, generally speeds up the anti-money-laundering checks every Australian lender is required to complete before settlement. Some lenders will also want an Australian-based representative, whether a lawyer, accountant or property manager, with authority to act on the investor's behalf for day-to-day matters, given the practical challenges of managing a local asset from overseas. A currency conversation with the investor's own financial adviser is worth having early as well, since loan repayments in Australian dollars against income earned or converted from Hong Kong dollars introduce an exchange rate consideration the investor should have factored into their overall return expectations.

What it typically costs

Pricing reflects the additional verification and the more conservative loan-to-value ratio typical for foreign investor lending, quoted on enquiry once a lender has reviewed the asset, the tenant and the investor's financial position. Beyond the loan itself, the investor should budget for the foreign purchaser surcharge and standard transfer duty as separate, material transaction costs.

Timeline

1. Same day — scoping call confirming the investor's position, the asset and current tenancy.
2. 5–10 business days — FIRB lodgement and financial documentation, in parallel.
3. 10–15 business days — lender matching, valuation and credit approval.
4. 5–10 business days — settlement, once FIRB approval is confirmed.

Questions we'd ask you

1. Has FIRB approval been sought, and is the property eligible under current rules for a foreign purchaser?
2. What is the property's current tenant, lease term and weighted average lease expiry?
3. What proportion of the purchase price do you intend to fund, and where is that equity currently held?
4. Can your income be verified through independently translated or certified documentation?
5. Do you have an existing portfolio or lending relationship in Australia already?

Related

Foreign investor loans · Commercial property loans · Foreign investors · Foreign purchaser surcharge