On 4 April 2022, the Foreign Investment Review Board (FIRB) released its Annual Report for the year ending 30 June 2021, finding that foreign investment increased despite a decline in proposed investment and the introduction of temporary zero dollar approval thresholds.


Each year, FIRB prepares an Annual Report (Report) in accordance with its responsibility to advise the Australian Government on foreign investment matters. The Report helps publicise recent developments in foreign investment including the level and type of foreign investment into Australia, together with current areas of sensitivity or concern.

2020-21 Report Highlights

A copy of FIRB’s Report can be accessed here. Some of the key findings of the Report are discussed below.

Reforms to Foreign Acquisition and Takeover Act

The 2020-21 reporting period saw the implementation of the most significant reforms to Foreign Acquisition and Takeover Act 1975 since its inception.

The reforms are designed to keep pace with emerging risks and global developments, as well as strengthening Australia’s foreign investment regime.

The reforms include:

  • transitioning away from the temporary zero dollar screening threshold arrangement, which was introduced during COVID-19;
  • introducing additional national security powers such, as mandatory screening of sensitive investments, “call-in” powers, and a last resort power to be used only in exceptional circumstances;
  • a new Register of Foreign Ownership of Australia Assets; and
  • new fee arrangements.

Increased levels of foreign investment despite decrease in proposals

Despite the continuing economic uncertainty amidst COVID-19, Australia remains an attractive destination for foreign investment. This is illustrated by foreign investment inflows which, in the three years to 2020, averaged 2.9% of gross domestic product (GDP) – compared with 1.2% of GDP for the OECD and 1.3% of GDP for the G20.

Although proposals declined, foreign investment in Australia increased. In 2020-21, there were 6,650 approvals representing $233 billion in proposed investment value. This highlights a decline of 1,571 approvals compared to 2019-20, but an increase of $37.5 billion (equivalent to 19.2%) in proposed investment value.

The decline in proposals can largely be attributed to the reduction in foreign demand for Australia’s residential real estate (discussed below).

There was an increase in large investments in 2020-21, with 38 approvals valued at $1 billion or more, totalling proposed investment of $97.9 billion. Approvals valued at $2 billion or more increased by 14.5% to 17, totalling $71 billion.in proposed investment.

Commercial real estate sector soars, whilst residential real estate falls

In 2020-21, the commercial real estate sector (particularly developed commercial property) attracted the highest number of approvals and investment, accounting for 35.2% of total proposed investment. Within the sector, 862 proposals totalling $82 billion were approved, compared to 440 approvals totalling $38.8 billion in 2019-20. This represents a 195.9% increase in approvals and a 211.3% increase in proposed investment.

There was a significant decline in approvals and value of investment for residential real estate. In 2020-21, there were 4,384 approvals totalling $10.4 billion in proposed investment value, compared to 7,056 approvals totalling $17.1 billion in 2019-20. This represents a reduction of 38.7% in approvals and $6.7 billion in proposed investment. A number of factors may explain the decline, including:

  • a tightening of domestic credit an increased restrictions on capital transfer in foreign countries;
  • state taxes and foreign resident stamp duty increases;
  • the introduction of an exemption certificate for individuals considering a number of residential properties with the intention to purchase only one; and
  • foreign investment application fees.

All other sectors experienced growth in approvals. The services sector ranked second for approvals (following significant investment in property and business services), with 744 approvals totalling $76.9 billion in proposed investment. The manufacturing, electricity and gas sector ranked third with 187 approvals totalling $35.8 billion in proposed investment.

US continues to as top investor, with Singapore rising upwards

The United States continues to be the largest source of investment in 2020-21, with 931 approvals totalling $56.9 billion in proposed investment (equal to 24.4% of total foreign investment). The United States was the largest investor in 5 of the 6 sectors, with approved proposed investment in the services and real estate (both commercial and residential) representing $27.3 billion and $20.8 billion respectively.

Singapore became the second largest source of investment with 524 approvals totalling $21.3 billion in proposed investment. Singapore’s proposed investment in the real estate sector was $13.8 billion (64.8% of the country’s total investment).

There was a significant decline in interest from Japan, with 129 approvals totalling $5.1 billion in proposed investment in 2020-21, compared to 129 approvals totalling $22.1 billion in 2019-20.

German-based investment increased almost threefold, with the total proposed investment increasing from $4.3 billion in 2019-20 to $12 billion in 2020‑21.

Foreign investment outlook

Although the Australian Government concluded that the recent FIRB reforms strike the appropriate balance between supporting foreign investment and protecting the national interest, the Government also found that framework should continue to be monitored to ensure it keeps pace with developments in the foreign investment landscape.

Further regulatory amendments have been flagged in relation to the treatment of moneylending, Australian media businesses, unlisted entities, securities investments that do not increase an investor’s overall interest in an entity, and acquisitions by foreign custodians.

FIRB continues to develop and work towards implementing a new ‘ICT platform’, aimed at modernising the way foreign investment is managed and regulated, and will streamline administration of, and improve processing and compliance activities across the foreign investment framework.

Key takeaways

It will be interesting to observe the level of foreign investment into Australia over the coming year, especially considering the easing of COVID restrictions and in light of the Government’s package of regulation amendments. Either way, FIRB will continue to play a key role in our economic landscape and we expect to see continued scrutiny in sensitive sectors and focus on safeguarding of the national interest.