Indian billionaire Gautam Adani. REUTERS/Amit Dave
India's wealthy, from old money to nouveaux riches IT
entrepreneurs, are quietly snapping up hotels and mines in
Australia just as the country 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 $A26
million, in Australian iron ore and coal mines through Jindal
Steel & Power.
That followed a $US2 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 A$57 million. Last year, it bought a chain of about 60
hotels in Australia and New Zealand for an undisclosed sum.
"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
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 percent 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.
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 $A67 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 $1 trillion, data from global wealth
intelligence firm Wealth X shows.
Combined with $465 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 $30 billion into Australia.
The new Australian visas will target individuals who invest
at least A$5 million in certain assets, such as
infrastructure government bonds, in return for concessions on
the usual migration requirements including qualifications and
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.