Insights shared at the recent Capital Markets Forum revealed that foreign tax surcharges in Australia are creating significant hurdles for international investors, particularly from Japan, the Property Council reported.
The taxes, which vary by state and change frequently, make navigating the investment landscape complex and uncertain.
Yuzo Nishiyama (pictured above left), executive director and head of Australia at Mitsubishi Estate, highlighted the ongoing difficulties.
“It’s constantly changing and it’s different state by state,” Nishiyama said. “So that’s definitely something that we always have to be mindful of.”
For many Japanese investors entering the Australian market for the first time, these tax complexities add an extra layer of difficulty when deciding where to allocate capital.
“That’s the challenge that we see at the moment,” Nishiyama said.
However, Nishiyama pointed out that Australia remains appealing due to its strong market fundamentals and growth potential. He cited population growth as a key driver of economic expansion, contrasting it with Japan’s aging population and shrinking domestic market.
“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,” he said. “Population growth is really a strong argument that we can make internally when we present a deal to our mothership to get approval.”
Alexandra Crossing (pictured above right), regional head for Asia Pacific at CBRE Investment Management, expressed concerns about the uncertainty surrounding Australia’s tax and policy framework.
Crossing highlighted that inconsistent policies and the absence of grandfathering provisions add to the complexity.
“All of those uncertainties do pile up and make it extremely challenging,” she said. “In the long term, if that uncertainty persists, it just leads to hesitancy, and you don’t have to invest in Australia.”
Crossing warned that higher perceived risks might divert capital elsewhere, the Property Council reported.
“If Australia is seen as having that additional risk... we’ll put the money into America,” she said.
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