Foreign investment is a major player in the Surfers Paradise region's economic success. Capital flows from all over the world into this golden strip of sand in Queensland's southeast, including into the residential and commercial property markets, boosting profits, creating jobs and spurring construction.
The federal government has announced plans to strengthen this international relationship, while making sure that domestic investors still have a chance to sink their teeth into the Australian property market. Here are a few things that buyers considering Surfers Paradise commercial real estate should know about.
Foreign capital is a major support behind the Australian economy. Queensland is already experiencing a boom in tourism and building activity and offshore investment from Asia is rapidly growing, with funds rushing into industries like residential real estate and development.
Prime Minister Tony Abbott and Treasurer Joe Hockey noted that the current policy framework for foreign investment will still apply, but there a couple of aspects that need changing. For one, enforcement and compliance are issues that have fallen by the wayside in residential real estate. By tightening the structure around penalties for non-compliance, foreign investment can continue to support the Australian economy and benefit those who follow the rules.
"While foreign investment is integral to Australia's economy, it's important to uphold the integrity of the framework and ensure that foreign investment is not contrary to our national interest," they said.
The government notes that there isn't much evidence of non-compliance in the commercial sector, the Australian Taxation Office will have a special division to investigate instances where investors break the law.
The Real Estate Institute of Australia (REIA) applauded the government on these latest changes. REIA recommended that the government make the housing industry more transparent, which CEO Amanda Lynch says will help maintain steady and sustainable growth in the real estate market.
"What is important is that the revenue gained from these penalties will provide the Australian Taxation Office with more resources to ensure all investors are complying with the regulations," she said.
The Australian commercial market presents fantastic opportunities, particularly in Surfers Paradise. While these changes largely apply to residential property and agricultural assets, it highlights the importance of understanding the investment process as part of purchasing in this part of the world. Get in touch with the experts at Ray White Surfers Paradise for advice and guidance.
These changes aren't set in stone just yet. Submissions continue to flood in, including concerns raised by REIA about the extent of application fees on residential property. Foreign investors could need approval before purchasing commercial property worth over $55million and a similar agreement for commercial land. Under the regime, there could also be a $25,000 application fee on commercial real estate.
Once approved, investors are generally treated the same as any other investors, giving them access to a great array of properties, from hotels to Gold Coast office space, and apartments to retail.
The government also raised the possibility of a $5,000 fee for residential properties under $1million, $10,000 for properties worth $1-2million and a further $10,000 for every extra $1million. This will ensure ATO can track down non-compliance, but REIA says it's a fine balance. Ms Lynch said this is less than the application fee in Hong Kong or Singapore, but the government should make sure the fees aren't too high.
"In setting the fee level for Australia, REIA encourages the Government to consider the equivalent global rates and not discourage foreign investment that has been proven to increase the supply of new housing at a time of a severe shortage," she said.
In any care, these changes confirm the upward trajectory of the real estate market. The real estate experts at Ray White Surfers Paradise can help you decipher these changes and set you on the path to owning commercial property in Surfers Paradise.