World Economy

China Firm Must Resell Illegally-Bought Mansion

China Firm Must Resell Illegally-Bought MansionChina Firm Must Resell Illegally-Bought Mansion

Australia’s government ordered a company owned by China’s Evergrande Real Estate Group Ltd. to sell a A$39 million ($31 million) Sydney mansion as it cracks down on illegal home-buying by foreigners.

Golden Fast Foods Pty has 90 days to sell Villa del Mare in the harborfront suburb of Point Piper, Treasurer Joe Hockey said in a statement Tuesday. The luxury villa was purchased in November 2014 via a string of shelf companies in Australia, Hong Kong and the British Virgin Islands, Hockey said, Bloomberg reported.

“We are very serious about integrity in our foreign investment sector,” Hockey told parliament.

The forced sale of the six-bedroom mansion is the first strike by Prime Minister Tony Abbott’s government, which last month pledged to crack down on illegal property purchases, amid concern overseas buyers are pricing Australians out of the property market. Evergrande, the Guangzhou, China-based developer of billionaire Hui Ka Yan, couldn’t immediately be reached for comment.

Overseas buyers are only allowed to purchase newly built properties in Australia with permission from the Foreign Investment Review Board. A parliamentary committee in November found there had been no prosecutions for breaches of the rules since 2006, and said the current A$85,000 fine was “seen by many as simply the cost of doing business.”

  Tougher Stance

The government last month proposed a tougher stance and said foreigners would have to pay a civil penalty of as much as 25 percent of the value of the property and be forced to sell it. Overseas investors wanting to buy homes would also have to pay application fees, starting at A$5,000 to help fund stronger enforcement of the rules, which have gone out for public consultation.

The proposed fees were described as excessive by real estate lobby group Property Council of Australia, which said they would deter foreign investment.

Home prices in Sydney jumped 13.7 percent over the year through Feb. 28, leading average gains of 8.3 percent across all major cities.