He said the Victorian government, which in April increased its own transfer duty from 3 per cent to 7 per cent, and amended their legislation to exclude commercial residential premises such as retirement villages, student accommodation and hotels.

"We believe it would have been much better to take out the new surcharge from the budget bills to refine the guidelines because at the moment it's not clear who they're targeting," he said.

"Much of the development stock of the new hotels delivered in the Brisbane CBD has been driven by foreign investment."

About 56 per cent of all rooms delivered and 50 per cent of all rooms under construction in Brisbane - or $1.2 billion in total investment - will be driven by foreign interests, according to data provided by the Property Council.

Mr Mountford said some of Australia's top property companies, including Stockland, Lendlease and Mirvac, could also be caught out by definitions in the new laws because they may have a majority foreign shareholding.

Fifty-fifty joint ventures between Australian and international investors, where control is jointly shared, will be caught by the Queensland surcharge.

"By imposing the AFAD on these entities, there is a high likelihood that the additional costs will be passed onto the end purchaser who is likely to be a Queenslander," he said.

Leading private Queensland developer Mark Stockwell is also rallying against the changes, saying international investors make up between 10 and 30 per cent of Stockwell projects.


"Without them the projects don't get up and the construction jobs don't get delivered," he said.

He said the state government should be doing everything they could to attract foreign investors, not turn them away from a cooling market.

"It's going to stop development like there's no tomorrow and that's the thing I'm really worried about," he said.

The big three eastern states have also targeted foreign investors in their respective budgets. In NSW, foreign buyers will be hit with a 4 per cent stamp duty surcharge from June 21 and 0.75 per cent land tax surcharge starting in 2017.

Victoria will raise its existing 3 per cent stamp duty surcharge and 0.5 per cent land tax surcharge to 7 per cent and 1.5 per cent respectively on July 1.



Queensland Treasurer Curtis Pitt remained defiant over the new transfer duty - which will raise $90 million over the next four years - saying he did not believe it would deter investors.

"The NSW Treasurer [Gladys Berejiklian] has said most economists would deny the surcharge would deter foreign investors. The Victorian experience has also shown the surcharge does not deter foreign investors," he said.