8 | Insights H1 2025 Other key observations include: • The shape of the recovery in Australia’s capital markets from here will be hugely dependent on the path of inflation, interest rates and GDP growth • The combination of some easing in monetary policy this year, slowing inflationary pressures, and attractive commercial real estate pricing should make 2025-26 a healthy vintage for market entry, consistent with prior cycles • Cap rates have expanded sharply across most sectors and markets, creating better entry points for new capital, including higher yields for recently completed developments • Elevated construction costs and tight labour markets are likely to continue impacting new development activity which should be supportive of rental growth and cashflows as the demand cycle recovers over the medium term. Australia’s commercial property market turns a corner in 2024 This recovery sets the stage for a healthy 2025-26, says Macquarie Asset Management. Australia’s commercial property transactions in core sectors lifted strongly in 2024, with overall sales rising in excess of 10%. Following declines in the previous two years, this suggests improving sentiment towards the asset class.
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