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Commercial And Retail Constructions Hit With Increase Charges

A number of industry groups have reported that a new cap on charges remains much too high to allow further development of several commercial and retail construction projects across Queensland. Premier Anna Bligh announced that there would be a cap on the commercial retail charges ($180) and office charges ($140) per square meter at the recent Building Revival Forum that was held in Brisbane.

Additional comments came from the Shopping Center Counsel of Australia (SCCA). Representatives from the organization stated that the amounts announced by Bligh were on the high end of the applicable range of charges. Therefore there were reasons to believe this would not offer the stimulus needed to get the new construction projects up and running. The council stated that this decision is putting more than $2 billion developments on hold.

Such construction projects, many of which are in various stages of approval, include a redevelopment in Garden City at Mt. Gravatt worth $300 million, a $350 million project for Indooroopilly, and another $400 million set for Pacific Fair located on the Gold Coast.

Angus Nardi, the deputy director of the SCCA called this a serious blow to the owners of shopping centers across the region. The move certainly will not provide incentives to revive the weakened construction industry.

Nardi also noted how his organization gave the Australian government very specific information about how the various developments could be jumpstarted again. The proposed revisions outlined the various financial benefits, totaling over $2 billion, which could result from getting the ten major retail projects back online. As a whole, the projects could generate upwards of 14,400 new jobs.

However, there are a number of complaints issuing from both the commercial and residential industry. While most of these issues will likely come to nothing, Paul Lucas, the Deputy Premier emphasized that it made sense to ask these property developers to contribute to the costs of new services and shoring up the infrastructure in the area.

Some experts acknowledge that changes to infrastructure are top issues in the coming years. They are really the biggest issue in the immediate term. Grosvenor CEO, Robert Kerr, talked both about the need to focus on infrastructure and about incentives to draw new businesses to Queensland. One options, he noted, was for the government to take an active role and join forces with super funds groups to create incentive packages. And also do some work so people can think about having low rate home loans.

Government reports have also highlighted the fact that the high numbers of office vacancies and much lower consumer demand have inhibited any meaningful changes in commercial construction. It notes that forecasts peg any realistic recovery in the sector is not likely to occur until later in 2011 or even 2012. It also took a sense of having low home loan rates if we think it the other way, for example borrowing money etc.

There are also discussions within the halls of government about whether a Major Projects Office should be established to cater to the various needs and circumstances that surround the more substantial economic projects on the table.

Those like Kathy MacDermott, the executive director of the Property Council of Australia are encouraged by the plan and have expressed real enthusiasm for the proposal.

Robert Kerr chimed in as well saying that there are examples of such agencies in places like Liverpool in the United Kingdom, that demonstrate how such offices could work more effectively by coordinating all of the projects into one agency. In fact, the Liverpool location had been very helpful in make the whole application process for large-scale projects more efficient.

There will be debates about this in the coming month, to be sure. Meanwhile the consequences of higher charges will ripple through the whole construction sector and beyond to the broader economy.

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