The proposed increases in foreign investment application fees could potentially hinder investors in the commercial property space and could derail Australia's economic recovery post-COVID-19, according to the Property Council.
Under the draft of the Foreign Investment Review Board (FIRB) fee structure, significant transactions will have a four-fold increase in fees, which will be based on the size of the assets involved.
Ken Morrison, chief executive of the Property Council, said this means that a straightforward commercial property investment by an institutional investor will be charged the same level of fees as an investment with "complex national security aspects".
"This draft fee regime treats commercial property like it is a national security asset like ports and telecommunications infrastructure," he said.
If passed, the proposed fee structure will hurt the commercial property market the most, since significant capital is poured into the sector, Morrison said.
"Australian office buildings, shopping centres, industrial parks, retirement villages, tourism assets and other commercial property are vanilla investments from a security perspective, and they attract the highest quality institutional investment from around the world," Morrison said.
Morrison said not only will this overhaul in foreign investment rules discourage investment in the commercial space, it will also prevent new job-generating projects, which are vital in economic recovery. He said the federal government needs to revise the proposal if the focus is to address national security risks.
"If the government is going to overhaul foreign investment rules to deal with national security issues, it doesn’t make sense to deter the world’s safest, highest quality investments into uncontentious commercial property assets," Morrison said. "The last thing our economy needs is to make it unnecessarily harder for get job-creating, economy-boosting investment proposals to get the green light."
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