Financial Year Preview

Hi there, Luke Wray, Principal of RWC Southwest with a bit of a preview of the Commercial property market leading into Fin Year 24-25.

If we start by taking a look at the local market conditions in South East QLD, one of the key drivers of the economy is infrastructure. Whilst the Olympics is still 7 years away, the pipeline of infrastructure projects many of which were announced shortly after David Crisafulli election win are driving confidence in the marketplace and this coupled with a slight softening of construction costs and a favourable interest rate environment all adds up to a fairly positive outlook for the year ahead. If we breakdown the commercial property landscape into the three main asset classes, the opportunities for the year ahead are many and varied, whether you are a owner occupier, investor, tenant or developer.

Kicking off with the office sector – At the big end of town we are seeing some pretty attractive yields for purchasers as part of the counter cyclical post covid world, in some cases close to double digit yields even for A & B level assets. As well as some good buying conditions for small to medium occupiers. Office as a sector is still seen as relatively high risk and this is why the more risk tolerant investors are looking closely at the sector.

From a retail perspective – The LFR and Neighbourhood centres have been changing hands at pretty strong yields with favourably selling conditions highlighted by a supply constrained marketplace and a pretty bullish outlook for the medium-term future of the sector. The small to mid-ticket space has been travelling very, very strongly with our friends and colleagues at RWC Retail moving a tonne of quality stock in the 2-20MIL space at sharp yields sometimes as low as 4-5%. This is pretty similar in the specialised spaces such as fuel and childcare, where we continue to see strong sales results and consistent demand, especially where the leases are often 15–20-year initial terms.

Lastly, The Industrial sector, where we tend to spend the bulk of our time, continues to perform very strongly and arguably still very close to the preferred asset class for investors not just in QLD but across the country as a whole. The owner occupier and investor market up to 10 Mil are characterised by low stock levels and consistent and high demand. The land market continues to go from strength to strength with the Gold Coast recording land rates at $1,500 psqm and above in certain cases and many of the blue-chip Brisbane suburbs edging closer to $1,000 psqm for lot sizes under around 1 acre of 4,000 sqm.

At the big end of town, we are starting to see stronger levels of activity, with several key transactions occurring in the first part of 2025 in the 20-50MIL price bracket. After quite a substantial lull given the rising interest rates of 2023/24. The listed property funds and private property groups have well and truly got busy again, which shows no signs of slowing down in the new fin year, especially with the cost of funds trending in the right direction.

So whichever category you fit into, I wish you all the best in the new fin year and if myself or my team can assist you in reaching your property goals this year and beyond please don’t hesitate to get in touch.

– Luke Wray