In Victoria, commercial tenancy is governed by the Retail Leases Act 2003. This legislation outlines the rights and obligations of landlords and tenants in retail leasing, covering essential aspects such as lease terms, rent reviews, disclosure statements, and dispute resolution mechanisms. Understanding this Act is crucial for anyone involved in leasing commercial retail property.
The Planning and Environment Act 1987 provides the framework for land use planning and development approvals in Victoria. Local councils administer planning schemes that designate land for commercial, residential, industrial, or mixed-use purposes. These schemes ensure that developments align with community needs and environmental considerations, and they play a significant role in the approval process for new commercial properties.
Under the Building Act 1993 and Building Regulations 2018, all building work in Victoria must comply with safety and quality standards. Commercial property developments are required to obtain the necessary building permits and adhere to the National Construction Code. Compliance ensures that buildings are safe for occupancy and meet the required design and construction standards.
The purchase of commercial property in Victoria is subject to stamp duty, administered by the State Revenue Office Victoria. The duty is calculated based on the property's value at the time of transfer. Additionally, landowners may be liable for annual land tax, depending on the total value of their land holdings in Victoria. Understanding these taxes is essential for financial planning when investing in commercial property.
The Environment Protection Act 2017 imposes duties on businesses to minimise environmental impacts. Commercial developments may require environmental assessments or need to comply with specific environmental standards, especially if they have the potential to affect the environment significantly. Compliance ensures sustainable development and avoids legal penalties.
Foreign investors interested in purchasing commercial property in Victoria must obtain approval from the Foreign Investment Review Board (FIRB) if the property's value is $58 million or more (as of 2023). Different thresholds and conditions apply for certain types of investors and properties. This approval process is crucial to ensure compliance with Australia's foreign investment policies.
The Victorian government offers grants through the Regional Jobs and Infrastructure Fund (RJIF) to encourage investment in regional areas. These grants support projects that create jobs, improve infrastructure, and stimulate economic growth outside metropolitan regions. They are particularly beneficial for businesses looking to expand or establish operations in regional Victoria.
The Business Competitiveness Program provides grants of up to $500,000 to Victorian businesses aiming to enhance productivity, innovation, and competitiveness. This support can include funding for capital equipment, business expansion, or innovation projects, helping businesses scale and compete effectively in their markets.
Established to provide equity investments for small to medium enterprises (SMEs) seeking to expand, the Victorian Business Growth Fund assists businesses that may be investing in commercial premises as part of their growth strategy. This fund helps bridge financing gaps and supports long-term business growth.
The Victorian government offers Land Transfer Duty concessions for certain commercial and industrial properties. For example, there's a 50% duty concession for commercial and industrial properties in regional Victoria for contracts entered into from 1 July 2023 to 30 June 2027. Additionally, a full exemption is available for commercial and industrial properties in regional Victoria. These concessions aim to encourage business investment outside Melbourne, promoting economic development in regional communities.
The Sustainable Infrastructure Fund provides grants for projects that improve environmental outcomes, such as energy efficiency upgrades or sustainable building practices in commercial properties. These incentives support businesses in reducing their environmental footprint while potentially lowering operating costs.
As of 2023, Melbourne's Central Business District (CBD) has seen a gradual recovery in office space demand following the impacts of the COVID-19 pandemic. Flexible working arrangements have influenced the market significantly. Some businesses are downsizing due to hybrid work models, while others are seeking high-quality spaces with amenities to attract employees back to the office. The office vacancy rate in Melbourne CBD was around 12-13% in early 2023, with expectations of gradual improvement as economic conditions stabilise.
The industrial property sector is experiencing strong demand, particularly in areas like Dandenong South, Truganina, and Laverton North. The boom in e-commerce has increased the need for logistics and distribution centres, leading to low vacancy rates—often below 2%—which in turn drives rental growth and encourages development activity. Investors are showing keen interest in industrial properties due to their strong performance and growth prospects.
Consumer preferences have shifted towards local shopping centres and suburban retail strips, benefiting these markets. The trend is driven by increased remote working and a desire for convenience shopping closer to home. Conversely, CBD retail has faced challenges due to reduced foot traffic from decreased tourism and ongoing work-from-home arrangements. Retailers in the CBD are adapting by focusing on experiential offerings and services that cannot be replicated online.
There's a growing investment in healthcare and life sciences properties, such as medical centres and laboratories, especially around major hospitals and research hubs. The increased focus on healthcare services has made these assets more attractive. Additionally, there is heightened interest in Build-to-Rent (BTR) developments in Melbourne. BTR offers potential mixed-use commercial opportunities and is emerging as a new asset class in the Australian property market.
Emu Money has a panel of 50+ lenders, including specialist lenders for commercial property. We can help you find the right lender for your needs.
Australia's major banks—ANZ, NAB, Commonwealth Bank, and Westpac—provide commercial property financing solutions with dedicated business banking specialists. They offer various loan products and financial services to support commercial property investments.
Maddocks Lawyers provides legal advice on property transactions, development projects, and regulatory compliance. Engaging experienced lawyers ensures that transactions are conducted smoothly and legally.
Firms like PwC, Deloitte, KPMG, and EY offer tax advice, due diligence, and financial planning for commercial property investments. Their expertise helps investors navigate complex financial landscapes and optimise their investment strategies.
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