THE PROPERTY DEVELOPMENT REVIEW
still face scrutiny. If construction costs ease, we’ll see a more meaningful pickup in activity, particularly in high-demand residential corridors. We are keeping a keen eye on outcomes from the newly formed Housing Delivery Authority (HDA), which aims to streamline the State Significant Development (SSD) pathway and introduce a concurrent rezoning process to help ease Sydney’s housing crisis – because nothing says streamlined like adding another government agency into the mix. In closing, the market faced challenges in 2024, including financing constraints, supply chain pressures, and evolving ESG requirements. Are there signs of relief, and what’s your outlook for 2025? Survive to ’25 was the mantra last year – well, we made it. We’re not out of the woods, but there’s light ahead. Financing remains selective and liquidity is improving. Supply chains are more predictable, albeit at a new cost base. 2025 won’t be a return to the glory days but certainly more transaction volume and it will be a year of recalibration - and for those who move early, opportunity!!
continue to improve. The repricing has largely played out – now it’s about vendors accepting reality and buyers recognising value. The days of aggressive compression are well behind us – gone are the halcyon days when a 25-point interest rate cut automatically shaved 25 points off market yields. That being said, rate stabilisation brings its own opportunities, even if pricing adjustments are now more of a slow burn than a sharp reaction. Private capital has played a major role in recent years—how have you observed this trend evolving, and what’s driving investment into commercial real estate compared to other asset classes? Private investors aren’t going anywhere. Their flexibility, speed, and appetite for value-add opportunities give them an edge. Their (typically) longer-term view, agility, and ability to execute without layers of approvals make private investors a formidable force. Looking at key investment trends, are there any emerging market themes in 2025 that are likely to have a material impact on commercial property values? Sustainability, adaptive reuse, and tenant experience are front and centre. ESG is no longer a box-ticking exercise - it’s influencing capital flows. We’re also seeing a shift towards alternative asset classes like data centres and life sciences as traditional sectors still face headwinds (ie vacancy in office). Which asset classes do you anticipate leading the charge in 2025, and what factors will drive their performance? Industrial will remain resilient, particularly in logistics and last- mile distribution. Neighbourhood retail will benefit from non- discretionary spending, and well-located offices with strong tenant demand will hold their ground. The wildcard? BTR – gaining momentum, but Sydney’s pricing remains a puzzle. With land values, construction costs, and yields out of sync, developers and investors need to get creative to make it stack up. Demand is strong – feasibility is the challenge. In the development site space, do you see more activity opening up in 2025, given the potential for interest rates and construction costs to stabilise or decline? Developers are getting more active, but feasibility remains tight. Sites with approved plans and minimal holding costs will trade, while those requiring significant capital outlay will
February / March 2025 – 29
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