Mid-size property developers received a blow today following the Federal Government announcement to implement application fees of at least $5,000 to foreign investors seeking to purchase Australian residential real estate.
Those looking to buy in the $1 million plus category will be looking at fees of at least $10,000 simply to have their FIRB application looked at.
Creating such disincentives for a significant portion of purchasers can stifle market activity, with mid-size property developers feeling the strain most, according to Sian Sinclair, Global Head Real Estate & Construction, Grant Thornton Australia.
“The fees represent another upfront cost that can deter a significant portion of key investors and in many cases, send them to invest in other shores. We’re seeing with our clients, those marketing their products to offshore investors are worried about how they sell the additional charge along with threat of significant penalties, when they invest in Australian product.
“At the top end of town the incremental increase in fees for higher value purchases being negotiated, could be the breaking point of a invest or not decision said Ms Sinclair.
Are we overestimating our desirability as an attractive investment alternative in a global market that is competing for foreign investment dollars. The fees will also raise concerns around what additional regulations will be applied, our political stability and potentially deter interest in our market.
“I question whether this is the right message to be sending to foreign investors in a competitive global market. I hope for the sake of our mid-size developers, who were anticipating increased activity on the back of the easing exchange rates and low interest rates across the globe, that our position hasn’t been overestimated as foreign investors seek alternative options around the region,” said Ms Sinclair.
Helina Lilley - National Public Relations Manager T +61 2 8297 2421 M 0437 725 520 E firstname.lastname@example.org