Technology and tax to drive 2000

Electronic commerce, the GST and a move to reduce commercial space ratios will affect demand for property in 2000, says Chesterton International managing director Graham Iddles.

“E-commerce will be huge, absolutely no question of that.

“E-commerce is big on distribution and small on face-to-face

customer space,” he said.

“Warehousing is important, but the corporate side can be run from a PC on any desk, anywhere – a shopfront or city offices are not part of the equation, so there may be a positive impact in the industrial area countered by a negative impact in the commercial and retail markets.”

Rationalisation of office space by tenants, begun with the drop of resource prices, also looks set to continue in 2000.

“Reduction in space ratios has the potential to pose a threat to the CBD and West Perth commercial sector. The crash in oil and gas prices in 1998-99, as well as generally weak resource prices over the year, have led to some companies rationalising their office requirements and cutting per capita space,” Mr Iddles said.

“However, it is too soon to say whether the savings achieved are worth the adverse affect on staff morale. There is no evidence that overall demand for office accommodation has been affected and stronger oil, gas and resource prices may turn this trend around anyway,” he said.

“Any minor cut in demand for office space must also be addressed in the context of increased demand for commercial accommodation for apartment conversion, so on balance we look forward to a positive year in the commercial sector.

The third factor influencing demand in the property market will be the GST.

“As for the GST – I’d love to give a definitive answer, but in all conscience I can’t. It will clearly have a major impact on everyone involved in property.

“Even so, for all the work we have done, it is not possible to

predict how it will affect rents and capital values – anyone who claims to be able to predict these outcomes with any accuracy should change his name to Rosa the Gypsy and open a fairground stall,” Mr Iddles said.

Property Council executive director Joe Lenzo says the GST is already affecting the market.

“Demand and therefore prices, for construction are already high in some sectors.

“This is due in part to people’s desire to have the work done before 1 July next year. The issue will be whether the market will be strong enough after 1 July to absorb the price increases which will flow from the GST,” Mr Lenzo said.

“The impact will be felt on the price of land, existing buildings and new construction. For existing buildings it is an indirect price hike due to the increase in prices across the board from the GST.”

However, the GST is expected to be a windfall for, among other financial advisers, property agents.

Stanton Hillier Parker asset management head Michael McCormick describes the transition phase of property into the new millennium as an exciting period with the implementation of the GST and the Ralph Report.

“Property owners will need the support of a professional real estate company to ensure that their income producing investment achieves the highest return possible,” Mr McCormick said.

Valuation firms are also set for a good year.

The requirement in the GST legislation for properties to be valued as at 1 July 2000 for property owners electing to be included in the margin scheme is driving demand for valuers.

Stanton Hillier Parker valuation and professional services director Steve Kish states the forces of change are ushering in a new breed of property valuers.

“Escalating expectations from clients across all sectors require valuers to be more than historians.

“Developers and clients are already booking our services prior to June 2000. We’re in for a big year,” he said.

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