The Melbourne CBD could be classed as a ‘special economic zone’ under a plan from Lord Mayoral candidate and encumbent Nicholas Reece.
Lord Mayor Nick Reece has called on the government to turn the City of Melbourne into a special economic zone in a bid to spur apartment development and renew its prosperity.
Mr Reece, who is seeking to retain the title in the upcoming lord mayoral election, will seek to have Covid-era stamp duty concessions reinstated as well as pause land tax and stamp duty payments for foreign investors to boost sales for new apartments in the CBD, Docklands, Southbank and surrounds.
The City of Melbourne currently has 16,000 apartments approved for development where construction has yet to commence due to a variety of factors including material costs, labour shortages and buyer reluctance amid property taxation and the highest interest rates since 2011.
Mr Reece announced the special economic zone plan as part of a speech delivered at the Property Council of Australia Victorian chapter’s Melbourne Revitalisation and Economic Growth Forum on Wednesday, and described the struggling numbers of new home starts in Victoria as a “crisis situation”.
If established, the special economic zone would reinstate a 50 per cent stamp duty concession for homes purchased off the plan in the City of Melbourne and a full waiver for those that had been built but sat empty for more than a year.
Apartments at developer OSK’s Melbourne Square project were popular during the City of Melbourne’s covid-era stamp duty concession program.
The Melbourne Square development in Southbank is worth billions.
The pandemic-era policy ended in 2022 and at the time was capped at homes with a dutiable value up to $1m. Mr Reece has indicated he would seek for developments where the concession applied to meet special criteria.
The topic has already been discussed with both Treasurer Tim Pallas and Planning Minister Sonya Kilkenny, with Mr Reece indicating he believed it could help kickstart major developments and reduce a key financial barrier to purchasing many buyers faced.
“Government can help close the gap on the finances of housing by providing some well-designed and targeted tax relief,” he said.
“The state faces less costs in servicing new dwellings in the CBD, creating the argument that the tax rates on these new homes should be less.”
The Property Council of Australia’s Victorian branch has also called for special economic zones in Victoria as part of pre-budget submissions in March this year.
At the time, the powerful property lobby group indicated its intent was to create special planning schemes paired with tax incentives to drive development.
The Focus Apartments in Southbank by Central Equity were also popular with buyers during the covid-era special arrangement.
The tower’s sales were supported by the program, a move that could help others commence construction if it were renewed.
PCA Victorian executive director Cath Evans said the City of Melbourne was the “engine room” of Victoria and hosted a quarter of the state’s economic activity – making it important to have it vibrant and “humming” with activity.
“Getting people into homes and boosting the pipeline of developments in the central city through targeted tax relief delivered as part of a special economic zone is an important step and we welcome the Lord Mayor’s initiative,” Ms Evans said.
The state government has a draft target goal of 134,000 new homes to be built in the City of Melbourne by 2051.
Source: realestate.com.au
