The booming property development industry could be impacted by taxes on foreign investment in the residential space, says Adrian Pozzo, chief executive officer of Cbus Property.
Pozzo has led Cbus Property since 2007. During his tenure, the property development and investment arm of the Construction and Building Industry Superannuation Fund has become one of Australia’s largest integrated developers with $3.8 billion-plus in funds under management and another $5 billion in the pipeline.
Pozzo believes that state government taxes on foreign investment in the residential sector will have long-term implications for the property industry as well as government revenue bases.
Observing that presales from the foreign investor market have propped up significant amounts of residential development over the last five years, Pozzo says cutting foreign investment won’t alleviate the problem of affordability.
With not enough stock being built, there will be pricing issues in three to five years; any reduction in development will also affect government revenue collections because they are reliant on property revenue, notably stamp duty.
A 10-point plan to fix housing affordability released last year by the Property Council listed out measures to boost supply, including incentives for planning reform as well as to attract institutional investment in new rental stock.
The build to rent model, for instance, could meet the needs of ‘Generation Rent’, says Pozzo.
Pozzo is currently overseeing some of Sydney and Melbourne’s most dynamic building projects. The Melbourne project on 447 Collins Street is a mixed-use building designed to deliver 49,000sqm of premium-grade office space, a five-star W Hotel and 202 luxury apartments.
The fast pace of technological innovation also worries Pozzo, primarily because a typical building being designed today might not be finished for another five years; this means building design and building requirements need to be continually reviewed over the course of the project to keep up with the latest tech developments.
Pozzo thinks the advent of autonomous vehicles signals the obsolescence of car parking spaces in buildings. Expecting Melbourne CBD to become another London, where only those who are prepared to pay fees and charges will have the ability to drive in the city, he says it may not be necessary to include five or six basement levels of car parking in an office building.
Adrian Pozzo will be speaking at The Property Congress in the Chief’s Wrap session on 13 September 2018 in Darwin.