Agents have had mixed reactions to the Fijian Government’s National Budget 2017-2018, which was recently passed in Parliament after its announcement late last month.
Budgetary allocations for the new fiscal year have had key increases for the Department of Housing and Ministry for Lands, as major sub-divisional and land development projects get underway, as well as relaxed duty for certain construction material and developers in various tax-free zones, to spur more investor interest.
“There are a lot of positives from funding for first time buyers, encouraging more strata for urban areas to the facilitation of more residential lots especially for the I Taukei (native) landowners,” noted Arif Khan of Bayshore Real Estate.
He said there was more demand for residential lots as housing demands increase, facilitate by a growing economy and liquidity in the market.
“As the rental market surges, the rent- to- own analysis comes to play and quickly the urban areas such as in Nadi is driving the demand for home ownership.
“Without a robust construction or sufficient planned housing development, I believe that new homeowners are turning to acquiring lots and building their own home. Even with the recent bottlenecks in the cement production and shortage of labour, land subdivision should be attractive for investors.”
Khan added that with a pent up demand for rentals- whether long or short-term, investors should also be paying attention to the apartments sector.
“There is a growing demand for high -end rentals in Nadi with fully furnished apartments fetching up $3000 per month. Technology and apps such Airbnb is disrupting the market for short term rentals so a greater incentive for investors is to get into this section,” he advised.
“Finally, with the urbanization, I see a great potential for mixed used buildings whereby the ground floor will be retail and top units could developed in Strata or condos. With a shortage of inventory in Nadi areas such as Martintar (Nadi), strata units are ideal.”
Arvin Pillay of Suva Realty Management said provisions in the new National Budget such as the new national minimum wage of $2.68 (increased from a previous $2.32) affected the property management sector.
“The recently announced minimum wage rate increase has not been thoroughly researched when applied to the property management sector,” he said.
“On one side we have a rent freeze and on the other hand the government is increasing the wages which is not a balanced approach at all. The gardeners and cleaners employed would see a wage rise but these cannot be passed on. “
With a Rent Freeze Order on residential and ground tenancy that is now into its 10th year, Pillay said it was not possible of to apply the costs of the Budget’s wage increases.
“There is no way of passing these costs to consumers or tenants because of the rent freeze order. These have to be borne by the owners and or the property managers.”
Imam Ali of Blue Ray Investment lauded the National Budget, saying it provided commendable incentives for first home buyers.
“Since the First Home Owners scheme, there has been lots of investor interest and buying power from younger members of the work force who want their own properties,” he said.
“They have really taken advantage of this program, and the incentives and the duty reduction on certain construction and building material announced in the new Budget is quite favourable for those looking to build. And with more subdivisions and land developments underway, we definitely expect more real estate activity from these young consumers.”
Ali said that presently, the housing supply couldn’t meet housing demands.
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