Australian Property News

Flood-affected industrial property devaluations must be reflected in land taxes and rates

Posted on Friday, February 18 2011 at 5:54 PM

Governments must temporarily reduce land taxes and rates for flood-affected businesses, according to King & Co Property Consultants.

To assist in reviving Brisbane businesses, specifically industrial landlords and tenants typically located on flat land near the Brisbane River or creeks, land taxes and rates need to reflect flood-related market devaluations, said King & Co managing director Phil Ainsworth.

Parts of Rocklea's industrial area went under by up to five metres, but even though industrial suburbs like this one will flood again, they can't be simply relocated because of their sheer size, handy accessibility to major arterials and surrounding supportive infrastructure, said Ainsworth.

With no flood insurance coverage, and inability to obtain insurance in the future, many businesses will be unable to reopen, placing further downward pressure on the landlord, the precinct and ultimately the economic wellbeing of Brisbane, Ainsworth said.

As a result, the property values will plummet and may not recover for a number of years, he said.

Ainsworth said the banks have already downvalued the industrial properties, decreased LVRs (loan-to-value ratios), increased IRCs (interest rate coverage) and have sought an increased equity from the owners due to the Global Financial Crisis.

"A further downward revaluation will exacerbate the situation unless a positive intervention through the State Government occurs, one that also deals with the issue of insurance and long-term planning," said Ainsworth.