Commercial property investors in the Midlands believe that tax
measures being introduced to boost the local economy by driving
more activity in the sector could store up financial risks for the
future while bringing benefits in the short term, according to a
poll conducted by PwC.
The poll was conducted at a recent Real Estate event hosted by
PwC at its office in Birmingham. The event was attended by more
than 25 commercial property investors.
The majority of respondents (59%) believe that the introduction
of Tax Increment Financing (TIF), a tax incentive due to be
implemented in April 2013 to help kick start local authority-led
infrastructure projects, could bring both benefits and risks. TIF
will allow local authorities to borrow money up front to invest in
infrastructure in specific areas where there is considered to be
growth potential and the uplift in business rates accumulated from
any businesses moving into the area will then be used to repay the
debt.
Alistair Reason, real estate expert at PwC in the Midlands,
said:
"The poll findings indicate that commercial property investors
in the region are not yet convinced that TIF will be successful in
kickstarting local authority-backed infrastructure development in
the region, without setting the sector on a path to another future
debt crisis. While they welcome the idea of tax incentives, they
are sceptical about whether the effects will be wholly
positive.
"Investors also want to be sure that when the scheme is
eventually implemented, local authorities will be well prepared,
having identified suitable projects, and ready to start bringing
benefits quickly, targeting areas where there is genuine growth
potential."
Opinion among commercial property investors in the region is
also split about whether the region's Enterprise Zones will be
effective in delivering economic benefits - equal numbers of
respondents felt they would and wouldn't be effective.
Alistair Reason, real estate expert at PwC in the Midlands,
said:
"In the wake of an economic downturn which has hit the
construction and property sectors harder than most, it is not
surprising that commercial property investors are sceptical about
the impact that the new Enterprise Zones will have. Despite this,
they are aware that the Zones could provide just the lifeline
needed to lift the sector out of the doldrums and they will be
willing they succeed."