SINGAPORE'S Mapletree Logistics Trust is understood to have withdrawn from negotiations to buy Stockland's $822 million industrial portfolio in response to the government's move to double the tax imposed on overseas investors.
Stockland declined to comment, but the group said last year it was selling its commercial and industrial assets to focus on its three Rs strategy of retail, residential and retirement.
Analysts said they believed the Mapletree deal had been shelved and were fearful it was the start of a trend of overseas investors pulling out of sales in reaction to the proposed higher tax charges.
In the past year, more than 37 per cent of the $9.8 billion of commercial property sales were undertaken by overseas buyers.
They have targeted all assets classes, with the latest being Malaysia's YTL Group competing with the Abu Dhabi Investment Authority for a portfolio of three Marriott hotels worth $430 million.
But in last week's federal budget, the government proposed doubling to 15 per cent the withholding taxes that are charged on income earned by international investors who own Australian commercial properties.
The chief executive of the Property Council of Australia, Peter Verwer, said that when the then Rudd government cut the withholding tax to 7.5 per cent, "the world responded by sending us more of their money to manage". "Increasing the tax makes Australia look either arrogant or capricious," he said.
Winston Sammut, the managing director of Maxim Asset Management, said when the government lowered the managed investment trust final withholding tax rate from 30 per cent to 7.5 per cent in the 2010 budget, it was seen as an incentive to attract investment funds into Australia.
"But last week's move to increase it back to 15 per cent will be seen as a negative outcome for countries that have an exchange of information agreement with Australia," Mr Sammut said.
"This may result in an increased revenue for the Australian government but may be a disincentive in the future for overseas investors to place funds into Australia."