THE PROPERTY DEVELOPMENT REVIEW
CAPITAL & CONSTRUCTION – WHO’S FUNDING WHAT IN FY26 VIC MARKET OVERVIEW
Tim Hyland - National Strategy Manager - Transactions & Advisory | RPM Group
Conversely, when sites are offered for sale with CHMPs approved, we find they’re being really well received by the market. An approved CHMP goes a long way towards de-risking a site from a developer’s perspective. Has there been increased interest from interstate or offshore capital, and if so, what’s drawing those investors to your market? We’ve seen strong interest from both offshore and interstate groups. From an international perspective, there’s been a substantial amount of capital from Japan flowing into Victoria’s greenfield market. Groups like NTT and Hankyu Hanshin are funding large greenfield site sales in Victoria due to low returns at home, a long-term investment mindset, and Melbourne’s strong population growth fundamentals. They’re drawn to Australia’s stable market and the transparent planning system that we’ve got in Victoria. In addition to that, Sumitomo Forestry has taken major stakes in both Henley and Metricon, a sure sign of international confidence in our growth area development industry. Interstate developers are also recognising the opportunity that Victoria presents. As little as 3-4 years ago, Melbourne developers were flocking northwards to secure land in Brisbane’s growth areas – primarily driven by the underlying value that market presented. Fast forward to 2025 and the tables have turned – South East Queensland has experienced incredible growth to the point where longstanding Queensland groups are now looking at Melbourne, driven by the value that can be found in our land market!
What’s your current read on how capital is flowing into commercial real estate development in VIC heading into FY26? Are you seeing an increase or slowdown in funding activity compared to this time last year? In Victoria’s greenfield space, where RPM primarily operates, we’ve seen clear signs of a sustained recovery through 2025. Lot sales across Melbourne and Geelong surged 48% in Q2 2025 to the highest quarterly level in three years. This activity in the retail sales market has translated into a growing appetite for development sites – the only thing holding that back is supply. When quality sites are offered to buyers, strong prices are being achieved – and this isn’t just limited to residential sites. Schools, childcares and commercial opportunities are all in high demand. Which asset classes are attracting the strongest capital interest in VIC right now, and what’s fueling that demand? Is this a continuation of recent trends or a shift in focus? In Victoria’s greenfields, we’ve seen residential sites account for around 60% of all transactions over 2024-25, with industrial and employment sites taking a further 30%, and the balance being alternative land uses like childcare, school and retirement sites. This is in contrast to 2022-23 where a surge in institutional investment saw industrial deals take a 50% share, with residential at around 40%. Perhaps the most notable shift in the greenfields over the last year however has been the emergence of data centre operators. These groups are significantly outbidding traditional logistics
developers for large-scale sites, so long as they are adequately serviced by power, water and fibre. It’s a fast-moving sector and RPM is working with many landowners looking to capitalise on this demand.
Are there specific locations, or end uses that funding partners are prioritising in FY26? In the greenfields, it’s all about certainty. With the Victorian Government seeking to limit greenfield development in favour of increasing infill development, developers and funders are prioritising areas with approved PSPs or those where a PSP is set to be completed in the short to medium term. The longer-term sites will still sell on the right terms, but it’s approved areas or those which will be approved soon that are drawing the most interest from buyers. Scarcity is also a driving factor. In regions like Clyde, where there is a limited supply of land remaining within the Urban Growth Boundary, record prices are being paid for sites on the prospect of significant revenue escalation over the life of the development. Are you seeing more conservative assumptions, delayed projects, or increased requirements around pre-commitments? Over the last 12 months, one of the areas in which we’re seeing more conservative assumptions around costs is Cultural Heritage. The increased burden that these Management Plans are placing on developers is having a significant impact on project feasibility – both from a cost and time perspective. These costs are also borne at the front end of the project, which impacts the IRR.
TIM HYLAND
46 – August / September 2025
August / September 2025 – 47
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