AFR Property Summit: Here’s What You Need to Know

There was no shortage of headlines from the Australian Financial Review’s Property Summit earlier this week.

From bold claims about productivity, to detailed market forecasts for the commercial and residential sectors, this year’s program had it all.

If you didn’t get a chance to follow on, here’s what you need to know.

Five Key Themes from the 2023 AFR Property Summit:

Australian Commercial Property is a Tale of Two Stories

The Australian commercial real estate market has split into two core verticals as part of the current cycle. Premium office properties in CBD precincts with excellent amenity and sustainability scores will hold their growth as the ‘flight to quality’ continues, while pricing for lower grade stock will likely shrink as vacancy rates and the cost of borrowing intensifies the standoff between buyers and sellers.

Build-To-Rent Boom to Continue

According to leading property developer, Tim Gurner, Australia’s major capitals including Melbourne and Sydney will continue to spearhead the build-to-rent movement as population figures soar, however Brisbane may fall behind due to heightened construction costs in Queensland, coupled with a reduction of institutional capital being deployed in the state.

Olympic Games to Drive Valuations

It’s not all bad news for Brisbane, though. The 2032 Olympic Games are expected to drive valuation growth for property owners by roughly 15 per cent following the program (if historical growth data remains consistent), which may result in a flurry of transactions led by the private sector as State Government development heats up to meet the Games’ infrastructure needs.

The Cheap Money Era is Over

The cost of borrowing capital has left many institutional commercial property players hamstrung – creating a new ‘higher-for-longer interest rates’ period – which will continue to keep the door open for well-established private investors that have led solid transaction activity recently.

Outlook For Major Homebuilders & Construction

It’s been a rough track for national homebuilders and construction businesses over the past 24 months, especially after the collapse of Porter Davis and Probuild shook the market. But, many experts from the Summit believe the worst is over, with Nigel Satterley of Satterley Property Group saying: “We think the top builders are now through the cyclone. They’re into writing profitable contracts.”

If you would like to learn more about these takeouts from the AFR’s Property Summit, or want to discuss a separate property matter, please reach out to us at info@jonesre.com.au.