Renewable Energy
Australian Property Market
THE PROPERTY DEVELOPMENT REVIEW
$9 BILLION GREEN ENERGY PIPELINE POWERS INVESTOR CONFIDENCE
CONFIDENCE HOLDS, BUT FRUSTRATION GROWS OVER DELAYS AND POLICY GRIDLOCK
Prepared by Ready Media Group
Prepared by Ready Media Group
Australia’s property industry remains optimistic, but the cracks are beginning to show. The latest Procore/Property Council Confidence Survey reveals national sentiment holding steady at 124 index points, just one below the March quarter. An index score of 100 is considered neutral.
Australia’s renewable energy sector is charging ahead, with $9 billion in new capacity approved for construction last year.
However, the topline figure masks mounting concern over a policy environment increasingly out of step with the urgency of Australia’s housing and infrastructure challenges. Confidence Uneven Across Sectors Property Council Chief Executive Mike Zorbas said the survey of 581 property professionals revealed mixed capital growth expectations across asset classes. Confidence is strongest in residential, industrial, retirement living, and hotel assets — all supported by underlying demand and demographic trends. However, sentiment around office and retail remains patchy, weighed down by ongoing uncertainty about return-to-office patterns and consumer spending. “E-commerce growth, supply chain reshoring, demand for last- mile delivery facilities and data centre infrastructure are keeping logistics attractive with vacancy very low in some markets, including QLD, WA and SA,” Mr Zorbas said. Prime office in well-connected CBD locations remains resilient. “Supermarket-anchored neighbourhood centres and large-format
“May 2025 dwellings approvals only just broke 15,000, well below the 20,000 per month needed to hit the National Housing Accord’s 1.2 million homes by 2029 target.” He said early reforms under the National Housing Accord were a welcome start. “The National Housing Accord is driving a first wave of reforms that should address slow planning systems administered without enthusiasm for new supply of city assets, untimely departmental concurrences, and bottlenecks in providing power, water, and sewerage infrastructure,” he said. Tax Settings Under Fire Mr Zorbas said concern over tax policy spiked this quarter, with 20 per cent of respondents naming it a top barrier — the highest level since mid-2020. “There is an increasing frustration over outdated tax policies that hinder investment and limit the development of new housing, commercial spaces, and industrial properties,” he said. “This is particularly evident in Victoria, where confidence continues to slide under the weight of the country’s least predictable tax regime.” With three dollars out of every ten spent on a new house going to government taxes, Mr Zorbas said we must stop levelling taxes so heavily at buyers. “It is almost like we want to stop new supply by taxing it out of existence – as we do with cigarettes and alcohol,” he said. He called for reforms that would unlock institutional capital — particularly from super funds — into new housing, starting with changes to regulatory guidelines. “We need to roll out the red carpet to superannuation investment in the property assets our growing cities need through reform of RG 97 – the ASIC guidelines that misrepresent stamp duties as management fees and therefore divert investment away from housing.”
According to CBRE’s latest Renewable Energy Market Viewpoint report, 88 new renewable electricity generation projects are in the development pipeline, buoyed by strong government incentives and robust projected returns. “The government’s push for net-zero emissions, along with supportive policies and subsidies is giving the sector a big boost,” CBRE’s Capital Markets Manager for Energy and Infrastructure Lee Holdsworth said. At the same time, the falling cost of renewable technologies such as solar panels and battery storage is making green infrastructure more accessible. “Add to that a growing desire to move away from fossil fuels, and you’ve got both public and private sectors jumping on board to back green infrastructure,” Mr Holdsworth said. Strong Returns Drive Investor Interest According to the report, Australia’s clean energy sector is now delivering some of the highest returns across the infrastructure investment landscape, with internal rates of return (IRRs) ranging from 5% to 18%. Solar and wind farms remain cornerstones of Australia’s renewable mix, with solar assets offering IRRs between 5% and 15%, and wind farms generating between 8% and 12%. “There is currently a huge investment in wind power, especially in high wind areas throughout Victoria and South Australia, where returns are strong,” Mr Holdsworth said. “Rooftop solar is also going strong, and is favourable because it’s low-risk, pays off quickly, and keeps scaling up.” Battery storage, however, is emerging as the sector’s highest- yielding asset class. The report identifies four-hour battery systems as delivering IRRs between 12% and 18%. There is also increasing momentum behind co-locating batteries with solar and wind assets to improve efficiency, manage supply volatility and respond more effectively to demand fluctuations. “Batteries are an essential asset because they help balance the grid and allow us to use renewable energy when it’s needed most, not just when the sun is shining or the wind is blowing,” he said.
Playing the Long Game Despite the compelling returns, CBRE cautions that renewable energy assets require a longer-term, more complex investment approach compared to traditional real estate. The report outlines several critical considerations: development timelines of up to nine years, evolving regulatory frameworks, rapid technological change, and the complexities of energy sell- back pricing. “Keeping in touch with changing energy policies, grid rules, and environmental regulations is crucial,” Mr Holdsworth said. “Technology is evolving very quickly so investors also need to be across the emerging advances in battery storage, hydrogen, and smart grids.” Location and connection costs can make or break a project’s feasibility, and proximity to existing grid infrastructure or other renewable projects can reduce risk. “The final consideration is around diversifying your portfolio across different technologies and regions which will help mitigate the risks of green energy investment,” he said. For investors willing to do the groundwork, the mix of policy support, maturing infrastructure, and high-yield opportunities is proving hard to ignore.
retail are also performing well,” he said. Planning Delays Stall Development
Planning reform emerged as the sector’s top priority, not just as a housing lever, but as a key driver of national productivity and investor confidence. The survey points to widespread dissatisfaction with approval processes seen as slow, inconsistent and poorly aligned with market demand. Queensland was the only state where forward work expectations improved, highlighting how state-based policy differences are already reshaping project pipelines. In Victoria and the ACT, sentiment weakened, with developers anticipating further hurdles ahead. Mr Zorbas said planning delays are weighing heavily on industry sentiment. “The Productivity Commission tells us we are building homes half as fast as we were in 1995,” he said.
10 – August / September 2025
August / September 2025 – 11
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