JLL Victoria Executive Director Capital Markers Director Josh Rutman said the change from stamp duty to an annual tax would likely have a stimulatory effect on property development.

“The 1% tax on unimproved value will make it less attractive to landbank over a long period and will encourage property owners to develop their land to generate income.

“The tax change may also will have a short term positive effect by boosting cashflows following the removal of the 6.5% upfront tax on transactions,” he said.

Mr Rutman said he welcomed the changes, subject to further details being released.

“Any measures to encourage further investment into Victoria would be warmly welcomed. Right now there is a lot of offshore money poised to invest in a wide range of assets including Build To Rent and this could be one of the elements to tip them in favour of Melbourne.

“With costs for businesses and investors on the rise, such as financing and construction costs, it is prudent to lighten the cash flow impacts on investors by making these changes,” he said.

Mr Rutman said it was clear the aim is to incentivise people to invest in productive assets by removing upfront barriers to further investment into the Victorian economy.

He said the 10-year transition away from stamp duty would make Victoria more competitive with global investors looking at competing tax environments around the world.

“We are a highly taxed economy compared to other western nations and costs such as these are material decisions for global investors looking to optimise their returns,” Mr Rutman said.

He said key questions to be resolved are whether the annual property tax will be recoverable from tenants as an outgoing and how multi-use properties combining retail, commercial and residential, would be treated.

“There are a number of unanswered questions to be resolved in coming months but we support the move away from upfront stamp duty in principle and look forward to more details as they become available and assist our clients to make investment decisions,” Mr Rutman said.