With interest rates nearing a turning point, where to for Australian real estate?

The run up in interest rates has provided a drag for all asset classes, but other cyclical and structural drivers are becoming more prominent in determining performance.

Underlying demand has been robust in many sectors, backed by the strongest population growth increment on record. Migration is running red hot but should soon normalise. We will unpack what this means for commercial, industrial, and residential assets.

Buoyed by a resilient buy side, residential property in all the major markets brushed off higher borrowing costs over 2023. Moving into 2024, regional discrepancies are growing, and more varied performance is anticipated for both price and rental metrics. There is plenty of action on the policy front to boost housing supply, including planning tweaks and incentives for institutional investors. The implications for affordability will be explored.

Commercial valuations have been hit by a run-up in borrowing costs, and transaction volumes have slowed to a crawl. Some tailwinds are fading while structural headwinds are also impacting key asset classes, notably the rise of hybrid work arrangements and technological change. The landscape is shifting and the when and where of opportunities will be of focus for core and non-core assets.

• Will anticipated interest rates cuts from the late 2024 trigger another major growth spurt for home prices?
• How much more pain is to come for the office sector?
• Is the strong run for Industrial over?
• Where next for non-core assets?