The state government’s decision to abolish stamp duty for commercial and industrial property buyers aims to boost prices and make Victoria an attractive property investment destination.
But for people looking for new ways to invest – and hopefully grow – their savings, how will the Victorian Budget announcement affect everyday Australians who might be considering a commercial or industrial property purchase?
According to some property sector players, the move will provide investors with a greater reason to choose commercial property investment at a time when rising interest rates have affected affordability.
Luke Etherington, managing director at commercial real estate firm Cushman & Wakefield, was quoted in the media as saying he believes the government’s decision promotes the fact that Victoria is “open for business”.
By reducing barriers to entry, he said, the move would drive up supply as developers and investors move to capitalise on a market that will become more dynamic.
Is it a good time to sell commercial property?
For existing property investors who might be considering selling off their commercial or industrial property portfolio, property valuation specialist Chris Mason, from Melbourne-based Mason’s Valuation Office, says it’s too early yet to see how the move to abolish the stamp duty tax will impact property values.
From his perspective, the announcement is a positive one.
“This is a really great idea and I will tell you why. We want the market to speed up and lots of transactions lead to confidence in the market – and we reduce the cost to enter the market,” Mr Mason says.
For people who hold investments and are wondering when is a great time to sell, Mr Mason says it’s a waiting game.
“I don’t think this will have an impact on values this early, but anytime you can make it easier to invest it increases the number of potential people who might get involved,” he says.
Julian White, partner at commercial real estate agency Stonebridge Property Group, shared a similar opinion in a recent media report, saying the move will create a more liquid market and boost transactional activity.
“Given the costs to buy back in after a sale with stamp duty, this will remove a major barrier, and we expect the average ownership time frame to reduce,” he said. “Investors will be more likely to trade up or out of investments if they see a better opportunity”.
There is no sign, so far, that changes to residential property stamp duty may eventuate, despite warnings from some leading economists that stamp duty on housing is an inefficient tax that unfairly punishes young home buyers.
The Victorian government says it expects the tax reform to add $50 billion to the state’s economy through enhanced business growth. And with the number of commercial property transactions down 70 per cent compared to the same period in 2022, there are sure to be commercial property owners watching the space to see how this news may help their investments grow.
Do you have a commercial or industrial property investment? Will this change motivate you to consider it? Share your story about commercial or industrial real estate investment in the comments below.
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