The prospect of a massive $5 million tax bill has failed to deter the Chinese buyer of a Toorak mansion, which smashed Melbourne records when it sold this month for more than $40 million.
The long-rumoured sale was finally confirmed when “Qi Yang” placed a caveat over the 18 St Georges Road home of former Mirvac director Marina Darling earlier this month.
The mysterious Mr Qi, who The Australian Financial Review understands has received Foreign Investment Review Board approval to acquire the 1920s mansion, will be hit with a $5 million stamp duty bill, including a 7 per cent surcharge for foreign buyers in Victoria, which came into effect in July last year.
In addition, the Australian Tax Office said FIRB application fees of $412,000 would apply for a $40 million home. The buyer also faces the prospect of an annual land tax bill of about $370,000 (if the Toorak mansion is not their principle place of residence) and another $300,000 in annual taxes from January 1 next year when a proposed new annual vacant residential property kicks in for homes vacant for more than six months in a calendar year.
By comparison, a local Australian resident purchasing the home to live in would pay about $2.2 million in stamp duty.
The deal, which occurred on the same day as a mainland Chinese investor paid $11 million for a vacant 2000 square metre site on St Kilda Road in upmarket Brighton, suggests appetite for premium Melbourne properties remains strong despite the recent guidelines introduced by the Chinese government to curb overseas spending by Chinese businesses and nationals.
It also dampens the argument that increasing taxes for foreign buyers introduced in Victoria, NSW and Queensland will deter overseas buyers from buying prestige properties.
Buyers’ agent Chris Koren of Morrell & Koren said the deal highlighted the eagerness of overseas buyers to get their money out of China “regardless of the penalties”
In addition, Mr Koren said it showed the attractiveness of blue-chip Melbourne real estate for Asian investors.
The off-market sale of the 1920s mansion known as “Mowbray” was negotiated by Toorak real estate agent Oliver Booth or RT Edgar, who could not be reached for comment.
It surpassed the previous record price of $26.25 million achieved last year when Netflow managing director Phil Dreaver bought the modern 9 Towers Road mansion from property developer Daniel Besen (the son of tycoon Marc Besen) and his wife Danielle Besen, who have separated.
Toorak selling agent Greg Herman from Sotheby’s International Realty said a record low number of homes for sale in Toorak was driving up prices.
“In my 30-year career, I have never seen less property on the market at the top end. There’s only five houses publicly advertised for sale at the moment in Toorak. But we are doing quite a number private off-market transactions,” Mr Herman said.
Mr Herman said most of Sotheby’s buyers were overseas-based.
“We are now seeing a lot more buyers from Malaysia and from Singapore. Mainland Chinese buyers are still prominent, but not as strong as.two years ago,” he said.
“Prices in Melbourne are about the 30 per cent of cost of similar properties in Singapore, so Toorak is affordable and astute purchasers like to diversify their asset portfolio.
Little is known about the buyer of Mowbray apart from their name. A caveat was placed over the property just over a week ago by lawyer Adam Zuchowski from the firm, Network Legal and Associates.
The vendor, Ms Darling acquired it from venture capitalist Roger Allen and his wife Dianne for $4.9 million in 1995, the highest sale in Melbourne of that year.
The five-bedroom two-storey home stretches across a huge 5000 square metres block on Melbourne’s most prestigious street and includes a pool and tennis court and a self-contained guest wing.
It is next door to 16 St Georges Road, a French Renaissance-style mansion controversially knocked down by its Chinese owner who paid $18.5 million for it in 2013.
by Larry Schlesinger
Australian Financial Review