Austrade’s new benchmark report positions Australia among the world’s best places to do business. How does the property industry take advantage of our strengths to catch the next wave of capital?
Austrade’s Why Australia benchmark report demonstrates that Australia is recovering well from COVID-19 and highlights its attractiveness as a destination for global investment and trade.
Here are just five reasons why Australia remains a great place to invest:
- Economic strength: Australia punches above its economic weight, accounting for 1.6% of the global economy despite being home to just 0.3% of the world’s population. We are poised to become the world’s 12th largest economy this year, up two places from 2019, according to the International Monetary Fund.
- CovidSafety: Australia was less hard hit economically than other countries. Australian GDP was 2.4% lower in 2020 than in 2019, a decline far smaller than the average across advanced economies. Bloomberg currently rates Australia third best country in the world in its COVID Resilience Ranking, behind New Zealand and Singapore.
- Trade and markets: Our trade balance is at a record high, underpinned by strong goods export growth. Financial markets are deep, liquid and sophisticated. Australia has US$2.2 trillion in managed funds, underpinned by superannuation, that has created the fifth-largest pension system in the world.
- Ease of doing business: According to rankings published by the World Bank, Australia rose four places to 14th position in 2020. When comparing economies with a population of more than 20 million, Australia now ranks fifth in the world, behind Korea, the US, the UK and Malaysia.
- Smarts: Almost half (47%) of Australia’s workforce has a tertiary qualification. We are also ranked #1 in the world for technological readiness; #6 for global entrepreneurship; #7 for spending on education institutions as a proportion of GDP.
“The strength of our economy, transparency of our markets, educated population and enviable lifestyles make Australia a magnet for capital,” says the Property Council’s executive director of capital markets, Belinda Ngo.
“Our challenge is to turn Australia’s world-leading position during the COVID crisis into long-term investment opportunities that will accelerate our economic recovery.”
Ngo says there are three critical success factors:
- Reopening Australia’s international borders. “You can’t buy a $100 million building without seeing it first,” Ngo says. “We must get the COVID risk settings right with our borders. But we can’t afford to miss out on international capital, skills, students and population. This doesn’t mean throwing open the borders next week. It does mean a plan – including strengthened, expanded and higher capacity quarantine processes – to steadily increase international arrivals in a COVID-safe way.”
- Creating regulatory certainty. Changes to Australia’s foreign investment framework were introduced on 1 January. This includes a new national security test and a four-fold increase in foreign investment application fees. “The Australian Government says we are open for business and we understand the importance of getting the balance right with national security concerns. We are concerned that the Foreign Investment Review Board’s process is raising the cost of doing business and increasing uncertainty for ordinary vanilla commercial property transactions at a time when we need more job-generating projects,” Ngo says.
- Eliminating unnecessary taxes: Last year the NSW Government passed exemptions from foreign investor tax surcharges for certain build-to-rent projects. But restrictive foreign investment taxes remain in place across Australia, with Victoria and Queensland’s tax regimes also penalising investment in commercial property and local businesses. “Now is the time to remove foreign investor taxes that make it less attractive to do business in Australia as we seek to kick-start our economic recovery.”
The Property Council is “cautiously optimistic” about Australia’s future, Ngo adds.
“Our outperformance during the pandemic and resilient economy are great strengths which has boosted ‘brand Australia’. But as many of our counterparts, including the US, UK, Canada and New Zealand, roll out vaccines at a fast pace, Australia risks falling behind.
“Property has been a pillar of strength for Australia throughout the pandemic. Now it’s time to catch the next wave of capital so property can be a driver of growth during our recovery.”