Many questions have been put to our Asian markets capital raising associate regarding the impact of a C2 medical centre investment by 188B visa holders.
Why is a C2 medical centre different from other commercial developments?
We call our medical centre developments “Precincts” because we incorporate a range of medical professionals into a single site, depending on the needs for the respective site. This unique approach creates a one-stop-shop precinct in growth corridors around major regional and city centres. We integrate general practitioners, dentists, pathology, radiology, oncology and 20 other types of medical practitioners into our developments. We also include allied health care, chiropractic, physios, podiatrists, mental health and 15 different kinds of professionals. Additionally, we include a childcare centre, aged care and mixed-use commercial space into the same development.
Vita locations are carefully chosen in areas of significant growth. With growing suburbs, professional services need to keep up with demand. Often little infrastructure is developed. C2 undertakes studies to determine optimal locations for our developments. First mover advantages makes our projects are highly attractive to medical professionals, and our tenancies are highly sought after.
As compared to commercial developments, in C2’s experience healthcare properties offer the best total returns of all property asset classes in Australia over the past nine years. Because medical professionals seek out opportunities to establish their practices in expanding suburbs, C2 developments can charge a premium per square meter. Also, medical tenants tend to lease for more extended periods of time over other tenants. Delivering substantial value from our Vita projects for the investor.
C2 has already secured three sites in growth corridors around Melbourne. Pakenham, Sunbury and Tarneit. Together this represents over 300 million dollars of development, and there are many other sites under consideration. It is planned to have over $1 billion under asset within three years. Each project can be viewed on our website.
Why 188B Visas?
188B visas are for business investors that receive temporary residency for specific requirements specified by state governments. One of the conditions is for the visa holder to invest in state government bonds for a four year period. Bondholders receive a yield of around 2.5% pa for a $1.5 million investment. The bonds are not redeemable or transferable during this period.
However, there is no restriction on bondholders borrowing against the investment, as long as there are no encumbrances placed on the bond during its life (a specialist migration law firm has interpreted this).
Australasian Specialised Finance (ASF) has begun a borrowing program that takes no rights over the bond to borrow funds for the term of the bond. I mention this, as freed up capital can then be productively invested in Australian assets.
As the above diagram illustrates, the visa holder invests $1.5m into a state government bond, who issue the bond to the new bond owner (188B visa holder). The bond owner repays the loan to ASF who lend $1m to the client (bond owner), who retains ownership of the bond. The freed up capital can then be invested in new projects. These typically include investing in house and land packages, their own business and can include C2 Capital medical centre developments.
How can our medical centre developments benefit 188B visa holders?
As I mentioned previously, C2 medical centres are developed and operated in suburban growth corridors. Specifically (strategically) placed, our developments offer significant benefits to the 188B visa holder.
In most instances, there are few medical care, allied health care, child care and aged care facilities built into newly established outer suburbs. Our integrated approach delivers essential social infrastructure for communities. Seen as more than a commercial development our medical precincts enhance a community’s access to quality professional care. Factor in the one-stop-shop approach to development, we are leaders in our commitment to the social good of new neighbourhoods.
So why is this important to visa holders? Well as part of the pathway from temporary residency (188B visa) to permanent residency, the applicant for the 188 visa needs to demonstrate that they are of benefit to the Australian community. As an investor in C2 developments, this shows the government that the applicant is demonstrating a commitment to improving society through investing in essential infrastructure.
Remember, this not only benefits the visa holder, but I also talked about the low yield of the bond (around 2.5%). Well if the bondholder could receive a socially beneficial investment and a high yield return over the bond, then they would benefit twice from utilising their capital. C2 currently offers the 188B visa holder over 15% return pa for an investment in one of our medical centres. Such an investment may be able to be rolled over through a buyback and reinvestment program to match the term of the bond (4 years).
In summary, there are significant benefits to the temporary visa holder by investing in a C2 development. Our medical precincts are unique in their design and incorporate many professional services into the same facility, that are needed in growing suburbs. The social benefits translate to improved chances that a temporary visa holder can receive permanent residency by investing in socially significant infrastructure. Additionally, low bond yields are enhanced with high yield returns over the life of the bond.
As a win-win proposition, C2 has attracted a significant amount of interest from temporary resident visa holders. C2 headquartered in Singapore, with a presence in HK & Malaysia. I travel to Asia frequently and are available to meet to discuss our developments with you.
Jonathan is our in-house capital raising associate for Asia. He is not a migration agent. All potential investments should be discussed with professional migration agents. Investors should seek professional investment advice before deciding to invest.