THE PROPERTY DEVELOPMENT REVIEW
It’s widely forecast that interest rates have peaked or are near their peak - what impact will this rate stabilisation have on the commercial property sector. At the core, it will provide buyers with confidence to participate and vendors with a more positive outlook on going to market. If interest rates pull back as they are forecast to through the back half of the year, increased buyer demand will follow. In terms of cap-rates, where do you anticipate these will land in 2024 relative to 2023. The low transaction volume through 2023 did make it challenging to accurately analyse the shift in market cap rates however believe the first half of 2024 will provide a clearer view. There has obviously been a softening when compared to years prior however the true variance should be better understood as the sample size of settled transactions increases.
One of the defining themes over recent years has been the influx of private capital targeted into commercial real estate assets - how have you observed this thematic & what’s driving this investment relative to investment in other asset classes.
There is significant private capital looking to be deployed and with softening yields & more cautious participation from funds/syndicators it is seemingly an ideal time for high net wealth privates to secure opportunities which may have previously been to hotly contested. Confident 2024 will see very strong participation from high net wealth private capital. In closing, are there any other investment trends or market themes that you’re analysing that are likely to have a material impact on values in 2024. For the Brisbane market specifically, following the areas designated within the ‘Brisbane’s Inner City Strategy’ document for additional density will be interesting to watch unfold. While certainly not directly correlated to density percentage increases, the noted areas should benefit from value uplift and/or increased interest from both investors seeing buildings now underpinned by improved land values and for developers seeking sites with additional scale.
February /March 2024 – 65
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