Ever-changing and location specific foreign tax surcharges are making investment in Australia ‘difficult and challenging’ attendees were told at the recent Capital Markets Forum.
Yuzo Nishiyama Executive Director – Head of Australia Mitsubishi Estate told the conference that foreign tax surcharges are difficult and challenging to understand.
“It’s constantly changing and it’s different state by state,” he said.
“So that’s definitely something that we always have to be mindful of.”
Mr Nishiyama said for many first time Japanese investors in Australia these taxes make it difficult for them to make investment decisions.
“That’s the challenge that we see at the moment,” he said.
Mr Nishiyama said that Japanese investors are attracted to Australia’s population growth.
“We have a very serious aging population issue in Japan, so the market itself is shrinking domestically.
“And that’s why a lot of Japanese capital is investing overseas.
“The reason why Australia is becoming a more and more attractive destination is transparency of the market, stable economic and political environment, and just market fundamentals.
“A very strong population growth, which equates long term economic growth, so, that’s why a lot of Japanese capital are now investing pretty actively in Australia.
“Population growth is really a really strong argument that we can make internally when we present a deal to our mothership to get approval.”
Alexandra Crossing Regional Head for Asia Pacific, Indirect Real Estate Strategies CBRE Investment Management said uncertainty in policy and tax settings can make decisions difficult.
“I think all of those uncertainties do pile up and make it extremely challenging.
“What doesn’t help is that lack of grandfathering and the flip flopping, which leads to uncertainty.
“But I think in the long term, if that uncertainty persists, it just leads to hesitancy, and you don’t have to invest in Australia.
“Every deal I put up, it has to be as good or better than another deal in another part of the world.
“We have to make sure that we’re getting sufficient return for every additional unit of risk that we take on in that investment.
“So if Australia is seen as having that additional risk, I might have a great shopping center investment here, and there might be a great other investment in the US, and they’ll look at and say, I can get the same return with a lot less risk, we’ll put the money into America.
“That’s the big challenge.”