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Commercial Property in AustraliaThe competitive cost of Australian commercial property has led to a growing number of foreigncompanies using Australia as the headquarters for their Asian operations

Low-cost commercial property

n the competitive global market place, a key location determinant is the quality and availability of officeaccommodation and supporting business infrastructure.

ustralia consistently emerges as a low cost base among developed nations. From labour and office rental costs to

&D, international comparisons confirm the commercial advantages of Australia as a business location.

Australias office market

n 2007, the Property Council of Australia listed Australias total office market space at 20.3 million sqm, andCentral Business District (CBD) office market space in the countrys major cities at 14.3 million sqm.

While office space in Australia is available, vacancy rates are tight in some centres. In July 2008, the aggregateacancy rate had fallen to 4.2 per cent, the second lowest level since the 1980s. Perth was the tightest major

city market in the country with CBD vacancy rates of 0.3 per cent. The Brisbane CBD market listed at 1.2 per cent,the Melbourne CBD market at 3.1 per cent, and the Sydney CBD market at 4.3 per cent. Canberra, the nationscapital, had higher availability with vacancy rates at 6.1 per cent.

n the Asia-Pacific, the main financial markets outside of Tokyo are in Australia, Hong Kong and Singapore.

hese centres are similar in terms of prime office market size but are dissimilar in terms of property marketcharacteristics. The most striking difference is that the Australian CBD prime office market is the mostcompetitive.

Australias construction market

he building and construction industry is a major source of economic activity in the Australian economy. In 2007-08, the construction industry (not including professional services such as architecture, surveying and consultingengineering) directly accounted for 6.5 per cent of gross domestic product.

n 2007-08, the industry employed an average of 960,000 people, around 9.1 per cent of Australias total labour force.

ustralias construction industry is currently very strong with the total value of construction work completed in

the June quarter 2008 at $30.5 billion. The year-on-year result represented a 5.5 per cent rise in completedconstruction work.

Construction costs in Australia are among the cheapest in Asia, without the long construction lead times commonelsewhere in the region.

Property law in Australia

Foreign investment regulation

Overseas interests may need to apply for foreign investment approval if they wish to:

Purchase residential real estate

Purchase rural land

Purchase vacant or developed commercial real estate Acquire shares, business assets or dealing with some other interest in an existing company; or Act as a developer (foreign or Australian) applying for advance approval to sell up to 50 per cent of residential

development to foreign interests

Fact Sheet February 2009

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axation bu in a ro erthere are certain taxes applicable to purchasing property in Australia. In particular, the following taxes are relevant,ut other taxes may also be applicable:

Goods and Services Tax (GST) Stamp duty Land tax

he introduction of a Goods & Services Tax (GST) has subsequently altered or abolished the above indirect taxes insome States.

he Goods and Services Tax (known in Australia as The GST) has been in operation since 2000. This tax is charged at aflat rate of 10 per cent and is levied on the supply of goods and services including dealings in real estate, other property

and rights. It is essentially a value added tax as it is the consumer or end user who ultimately bears the tax.

Stamp duty is levied on a wide range of transactions such as agreements for acquisitions of real estate, businessesand some marketable securities, as well as leases and financing transactions. It is a state tax and is charged eitherat a fixed rate or on an increasing scale having regard to the value of the property or the consideration.

and tax is an annual state tax based on the ownership of land and, in some states, on the usage of land. It ismposed by all states and the Australian Capital Territory but not the Northern Territory.

roadly, land tax is levied on the total unimproved value of the land held by the owner at a specified date. Land taxates and thresholds vary from state to state, and over time.

t is advisable to obtain professional advice about taxation issues before entering into any property transaction.

axation selling a property

Selling property in Australia can also be subject to certain taxes:

Capital Gains Tax (CGT)nder Australias domestic taxation laws and, in particular, the relevant CGT provisions, the gain on the sale ofustralian real property is subject to Australian income tax. Under Australias double tax agreements (DTAs),ustralia generally reserves the right to tax a gain on the sale of Australian real property (refer to the Alienation

of Property Article (Article 13) of most DTAs). Therefore, where a non-resident makes a gain on the sale ofustralian real property, the non-resident will be subject to Australian income tax on that gain.

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Fact Sheet Commercial Property in Australia February 2009

Disclaimer

ny person relying on this information does so entirely at their own discretion and Austrade strongly recommends the reader obtain independent professional

dvice prior to acting on this information. Any reference to companies or investment activities is for illustrative purposes only and does not constitute an

ndorsement of those companies or any investment activity. Accordingly, Austrade does not accept any liability for loss arising from reliance on the contentsf this work.

Useful websites

Australian Property Institutewww.propertyinstitute.com.au

Property Council of Australiawww.propertyoz.com.au

Housing Industry Associationwww.buildingonline.com.au

Think Australia partner with usThe Australian Trade Commission (Austrade) providesinternational businesses with a single, integrated point-of-contact for all trade and investment inquiries. Workingin partnership with business and government, Austradecan provide your company with the information needed toestablish or expand a business in Australia. Austrade canalso help by connecting you with the right industry andgovernment contacts as well as providing information oninvestment regulations and government assistance programs.

For more information visit

www.austrade.gov.au/invest