The surge in residential development, particularly in inner city and close-in suburbs is:

• changing the use being made of land;
• changing the the "highest and best" of other properties (ie: making many existing uses redundant);
• increasing land values dramatically, which will flow onto unimproved land values; and consequently land tax commitments.

This urban renewal process is a natural consequence of evolving cities, however the speed of the recent changes may catch some investor out with the impact of higher land tax (and to a lesser extent rates) reducing returns to investors and businesses and consequently reducing the market value of their properties. 

We have seen instances where a considerable component of a commercial property's value has been wiped off by increases in land tax that resulted from recent unimproved value increases and having analysed recent development site sales, particularly in the fringe suburbs, we believe the impact over the next couple of years will be even more dramatic for some properties. 

The properties most affected are those that undercapitalise a site and while new levels of value will be phased in, the impact will continue over the new few years if these new levels of value are applied by the Department of Natural Resources and Mines.

For the latest government Information Sheet.

Progress on valuations for shopping centres.