THE PROPERTY DEVELOPMENT REVIEW
CAPITAL & CONSTRUCTION – WHO’S FUNDING WHAT IN FY26 SA MARKET OVERVIEW
Oliver Totani - Managing Partner | RWC Adelaide
What’s your current read on how capital is flowing into commercial real estate development in SA heading into FY26? Are you seeing an increase or slowdown in funding activity compared to this time last year? Adelaide in general remains in a really positive place. Whilst general enquiry has dropped off, we are seeing some increased activity from those groups with definitive project mandates, especially in the hotel and residential sectors. Whilst developers' feasibility continues to be tested when considering new office developments, we are starting to see some increased enquiry from those looking to take on some new and existing office requirements. Which types of capital are most active in your market right now — for example, private equity, family offices, non-bank lenders — and what’s driving their appetite? High net wealth individuals and family offices are looking to make counter cyclical market moves, whilst the Offshore Asian Capital (with local representation) seems to be back active in a big way. There remains many challenges in the broadacre residential development space, so it feels like there may be a recalibration back to multi-level high rise living. So for the right CBD sites, there remains buyer demand. Additionally, the city tourist accommodation sector and student accomodation remains undersupplied, so there is probably room for another 'handful' of transactions in this space. Which asset classes are attracting the strongest capital interest in SA right now, and what’s fueling that demand? Is this a continuation of recent trends or a shift in focus? We are experiencing broad appeal across a range of asset classes here in SA. Be it childcare, fuel convenience, QSR, A grade metropolitan office,
industrial and medium density residential there seems more capital than there is the availability of quality buying opportunities. Unlike other investment jurisdictions (i.e. victoria), Adelaide is not being let down by bad public policy, our Zero Stamp Duty position continues to provide added motivation for investors who are willing to invest across borders. Are there specific locations, or end uses that funding partners are prioritising in FY26? Capital/Funding Partners will partner on the right projects in Adelaide regardless of asset class. Of course some asset classes are more favoured than others, but we are having multiple conversations with Tier 1 and 2 funders across multiple asset classes in Adelaide, with all of them ready and willing to assess opportunities across the state. How are tighter credit conditions and sustained construction cost pressures affecting funding models for new projects in SA? Construction Costs remain an issue. Whilst they have even out of late, we forecast significant increases over the short term. South Australia is in the midst of an infrastructure boom funded by both State and Federal Governments, and the reality is we do not have the labour to support this increasing demand, not to mention the private investment demand. This will mean funding models for development sites will become more challenged, certainly for the small to medium sized projects. The reducing cash rate will help, as yields will tighten, however they won't tighten enough to make most projects worthwhile. The flip side to this will be that existing assets will continue to see elevated capital growth, across all sectors. Of course some sectors will outperform others, but we can see this structural issue (supported by high spending Labor Governments) likely saving capital values for the challenged office market.
Are you seeing a rise in alternative funding structures — such as joint ventures or private debt arrangements — becoming more common? If so what’s prompting this trend? For me, I think it's quite the opposite. The majors it would seem are very keen to claw back some of the market share lost over the last two years, and with monetary policy easing, this obviously helps the institutional banks rather than the alternatives. What are capital partners looking for in a project heading into FY26 — and are you noticing a shift in their expectations around feasibility or risk? It's an interesting proposition. I think we will start to see less cranes in the sky when it comes to commercial projects in the short to medium term. The savvy and nimble tenant driven developers will continue to deliver the right retail projects, and increasing defence spend will drive further user demand and therefore development in the industrial sector. Watch the shopping centre space, the surging new migration numbers and the notion that governments have no desire to slow it down means we need more sqm of supermarket and non- discretionary retail to support it. Over the next 12–18 months, where do you see the biggest opportunities or headwinds for developers seeking funding in SA? Short term I think Adelaide remains on solid ground, we remain an affordable investment destination when compared to the surging Brisbane and Sydney markets and a vastly better alternative to an overtaxed Victoria. We don't need a great increase in population growth to get a huge uptick in activity. The biggest risk is the shortfall in labour and human resources, if we don't get this right then could be some downside risk. Biggest opportunity vertical living in the inner suburbs of Adelaide. We can't deliver broad acre residential lots because of infrastructure issues, so 3 to 5 level apartments in the suburbs are likely to have a renaissance.
OLIVER TOTANI
110 – August / September 2025
August / September 2025 – 111
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