Budget 2018: Expectations for commercial real estate

By Greg Bell

The federal government launched its bid for re-election on Tuesday 8 May, with a budget showcasing some major benefits for investors of commercial real estate.

It's not common for a federal budget to directly impact commercial property. However, investment in certain sectors, including medical research and social services, can have wider influences on property demand.

Job creation may increase demand

Office buildings and other commercial spaces tend to enjoy increased demand with job growth, as more businesses require extra space to expand.

The creation of new jobs is a key focus of the latest budget, with many tax concessions and incentives in place or continuing to supporting small and medium sized businesses to grow. Over the past year, the government has proven a strong strategy for creating new jobs, boasting on average 1,000 positions opened every day according to the Australian Bureau of Statistics.

Under the continuing Ten Year Enterprise Plan, small businesses can expect to see their tax discount rate rising from 8 per cent to 16 per cent by 2026-27. Meanwhile, the turnover threshold used to define a small business is increasing from $2 million to $10 million, extending access to tax benefits to a wider range of entities.

Furthermore, businesses are being encouraged to hire workers aged 50 or over. With the Restart wage subsidy, businesses that employ eligible job seekers aged 50 years or over for at least 30 hours per week for a period of 12 months will receive up to $6500. A bonus of up to $3500 will be provided if the employment lasts for the full 12 months.

Lastly, income tax cuts are expected to improve spending on retail.

Sector funding offers commercial real estate benefits

The budget also features an allocation of $1.3 billion to fund medical research and development, and $2.4 million for science and technology.

As well as improving productivity and health of workers, medical funding is expected to affect the demand for office spaces in close proximity to hospitals. For this reason, it's possible we'll see a rise in commercial property prices around Gold Coast University Hospital.

Meanwhile, planned technology funding for improved GPS functionality promises to support those running dispatch operations from industrial real estate, as supply movement may be more accurately tracked, logged and optimised. This could in turn serve to support retail businesses at the end of the supply chain.

For more information about commercial real estate on the Gold Coast, talk to a professional at Ray White Commercial Gold Coast today.

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