QLD MARKET OVERVIEW
QUEENSLAND
Greg Bell - Head of Commercial & Industrial | RWC Gold Coast
Looking ahead to 2025, what’s your outlook for the commercial property sector, considering economic conditions, interest rate trends, and investor sentiment? My personal thoughts are that it is going to be a very good year, we will see interest rates fall, we will potentially see a change of government and I just feel that there is a lot of optimism in South East Queensland, in particular the infrastructure that is going to be involved in the 2032 Olympics and all of the employment that will be created. We are still an affordable state and the state with the most desired lifestyle. I believe it is a great year ahead for SEQ. Reflecting on conversations with buy-side clients, what’s their sentiment, and which buyer profiles do you anticipate will be most active this year? I have daily conversations with clients and in those conversations, they are fairly optimistic. There is an appetite to move into the commercial property space, with strong interest still for industrial and increasing interest in retail and office. What fundamentals are investors prioritising before deploying capital in 2025, and which asset classes do you anticipate will drive transaction activity? Without a doubt investors are looking at the strength of a tenant. It’s about the quality of the tenant, is it a franchise or national tenant, the structure of the lease and of course are they in a good location to survive trade. From a developer’s perspective, what opportunities exist in your market, and how should they be positioning themselves to capitalise on these opportunities in 2025? Developers are looking at the Gold Coast because they know there are 15,000+ people moving to the Gold Coast every year. This won’t stop and will likely increase as the years progress. We have the iconic ocean to the east and the mountains to the west, so there are only so many development opportunities. We know that since the pandemic, there has been a big influx of people migrating from New South Wales, Victoria and even New Zealand
wanting the Queensland lifestyle, which is driving prices for developments. Even though developers have the challenges with building costs and land acquisition prices, they are still able to achieve the quality rate per sqm for sales. Naturally, locations close to the beach, or close to public transport and main roads are highly sought-after. We continue to see a big demand for the southern Gold Coast with areas like Burleigh Heads, Palm Beach, Tugun and Bilinga are all experiencing a really enjoyable uplift in development. Based on discussions with vendors and potential vendors, how are they observing market dynamics in your region, and to what extent do you expect an increase in properties coming to market this year? I am finding that vendor’s expectations are still very high and they can have an inflated view on the market, following the boom since the pandemic. I expect there will continue to be price increases for property for 2025, 2026 and potentially 20207 could be strong growth years for the Gold Coast purely due to the shortage of supply and continued strong demands. Vendors know this. With interest rates stabilising or potentially easing in 2025, what impact do you foresee on the commercial property sector? With the potential of interest rates dropping, this will naturally give confidence to the market and drive a positive sentiment across the board. I hope that we do see some significant rate reductions in 2025 and early 2026. Where do you anticipate cap rates will land in 2025 relative to 2024, and how will pricing trends influence buyer and seller behaviour? We saw 4.5% - 5.5% cap rates back in the real hey days of the early 2020’s. Interest rate rises then shifted them up to 6% - 7%. I see them drifting back to 6% and potentially 5.5%, and this will depend on how much the rate cuts some in at. To match the lower cap rates, you need to have a quality tenant, long leases, CPIs, market reviews and a history that gives confidence to a buyer, otherwise rates will be at 8%-9% for weak tenancies
GREG BELL
76 – February / March 2025
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