Federal budget a hit and miss for commercial property sector: Cushman & Wakefield

The commitment to infrastructure investment as part of the federal government’s latest budget is encouraging for the property sector says Cushman & Wakefield Australia managing director David Woolford.

However, he says the benefits of this commitment to the nation’s productivity may be jeopardised by missed opportunities elsewhere.

Victoria will get the biggest allocation of funds with $3.8 billion, of which $3 billion is for Melbourne Metro rail, $2.7 billion for NSW, mostly for highway expansions, $2 billion for Queensland, $1.1 billion for WA and smaller amounts for the other states.

“On one hand we commend the government for pushing ahead with an array of important infrastructure projects in cities and regional locations in the face of a significant deficit, on the other we are concerned about the long term timing of some of these projects,” said Woolford.

“Additionally, it is a concern that a corresponding commitment to improving housing supply was not apparently forthcoming.

“The housing market is a critical driver of the broader economy and the commercial property sector by extension, so it is disappointing that the budget in no way addresses the ongoing issue of housing affordability in this country.

“Overall we are sceptical of this budget’s capacity to improve productivity at a practical level and as such we await the Coalition’s response with bated breath.

“Another source of concern is the potentially ill directed tweaking of our thin capitalisation rules as they apply to inbound investment in Australia. The damage caused by the increase to the withholding tax last year was significant and now, with the government planning to increase the tax payable by international credit providers, effective borrowing costs will rise and project returns will diminish.

“Any measures that restrict our ability to attract capital to our shores are unwarranted and damaging, and should be reconsidered,” he said.