Unearthing
Flint Davidson
Welcome to the sixth edition of Capital Edge.
The catch phrase “survive ‘til 25” was coined a few years ago when we were in the depths of the market recalibration. 2025 seemed a long way off but with its arrival the question remains - are things really any better?
It might not feel like it, but whilst the market has substantially re-priced we are in considerably better shape than we were this time last year. Capital is slowly reactivating, inflation is on a tighter leash, the much anticipated interest rate reduction cycle is closer and pricing transparency with increased volumes has made pricing assets easier. The year ahead will once again present some of the challenges we have grown accustomed to navigating recently – deal timeframes are likely to remain slow, wholesale capital will be limited and the relative value equation across global markets will ensure Australia will have to remain competitive.
As we look ahead with our first Capital Edge issue of 2025 we can feel positive about the prospects of further increased deal volumes and the opportunities to create value with each sector poised for varied trajectories.
In our Sector Spotlights, we take a close look into the Agribusiness market, where we have seen strong investor interest in natural capital, large-scale cropping and irrigation assets.
We look closely at the Alternative markets, which present exciting opportunities for developers and investors. The renewables sector is set for accelerated growth. We also expect our Childcare and Healthcare sectors to remain high on local and Asian investors’ radars.
We also examine the state of the Retail market which is witnessing a solid re-bound in liquidity and firmly establishing itself as one of the most favoured sectors in 2025. We review some of the significant retail trades in 2024 and understand how the re-based pricing, sustainable income profiles and lack of supply is attracting capital to the sector from all over the globe.
We hope you find this issue of Capital Edge both informative and insightful. As always, we are committed to providing you with the latest market intelligence and expert advice - by staying informed and adaptable, we can navigate this dynamic environment and achieve sustained success.
Flint Davidson
Head of Capital Markets, Pacific +61 411 183 061 flint.davidson@cbre.com.au
2025Outlook Pacific Market
CBRE’s 2025 Pacific Market Outlook includes our house view on investment themes, transaction volumes, cap rates, demand, supply and rents that will guide decision making as the market shifts.
Where are the pockets of exceptionalism that are driving rent and capital value growth into the mid-teens, how slow will leasing activity move and will development activity continue to shrink?
OFFICE
01 OCCUPANCY GAINS
02 RENTS OUTPACE
Return-to-work has continued to gain momentum across Australia and New Zealand, and we see scope for further improvement in 2025. Vacancy in offices commanding premium rents is just 5.5%.
Economic rents for premium office have increased by 40% to 60% between 2020 to 2024. For grade-A economic rents are 20% to 35% above market rents, supportive of buy versus build.
03 SUPPLY
04 RENTS
We have pulled back supply growth assumptions to 0.7% per annum, from 1.5% per annum to 2028. Tenant delays in leasing decisions, high construction costs and financing issues are impacting supply.
For 2025, all markets are likely to see net effective rent growth. Sydney CBD Core and Brisbane should outperform, posting high single digit net effective rent growth.
01 DEMAND
INDUSTRIAL & LOGISTICS
Gross take-up in 2024 fell short of the ten year average for the first time since 2018 due the combination of some precincts continuing to lack vacant space available to lease, coupled with demand normalising. We do not anticipate demand for good quality assets in core locations to drop. Occupiers in some markets are now well-positioned to capitalise on increasing incentive levels, leveraging favourable market conditions to negotiate more advantageous lease terms. This dynamic is expected to drive an uptick in leasing activity this year.
02 SUPPLY
03 VACANCY
04 RENT GROWTH
The 2025 supply pipeline is forecast to total almost 2.5 million square metres (40% above the long-term average). The 2025 pipeline is already 40% precommitted as at Q4 2024.
The industrial vacancy rate of 2.5% in Australia and 1.7% in New Zealand remains one of the lowest globally. Normalised demand levels, are expected to place upward pressure on the vacancy rate – however, we expect Australia and New Zealand to continue to hold the lowest vacancy rate globally by the end of the year.
We expect single-digit rent growth across most markets in 2025 reaching circa 4.0% for super prime net face rents. For Auckland, effective rents are expected to fall back slightly in H1 2025 but improving leasing market conditions will drive renewed growth in the 3% to 4% range during 2026 to 2027. 05 ESG & POWER
Sourcing renewable power and providing onsite charging for EV fleets will become a key consideration for logistics supply chain. Secondary stock could see improved business case for upgrading whole of site.
We expect pockets of exceptionalism around premium assets where rent and capital value growth could comfortably exceed mid-teens in 2025.
Outside of that, leasing activity is likely to be slow and development activity will continue to shrink.
“ “
Sameer Chopra Head of Pacific Research
01 OUTLOOK
02 FLOCK TO SHOP
03 LACK OF NEW SUPPLY
04 SUB 5% VACANCY
05 RENT GROWTH RESUMES
RETAIL
Consumer cost-of-living and subdued housing market are headwinds that could abate in 2025. Transaction activity has picked up and we see scope for modest uplift in valuations during 2025.
Retail sales are forecast to grow 3% per annum through the coming decade, assisted by population growth. Incrementally, recreation, health and apparel are gaining share of spend.
The majority of regional centre and CBD supply is comprised of extensions and refurbishments with very few new centres being constructed. Neighbourhood and Large Format Retail centres comprise 53% of the future pipeline, located in regions of population growth.
Vacancy rates are likely to continue trending lower, with shopping centres and large-format retail at sub 5% levels.
Rents for shopping centres are forecast to grow at low single-digit rates through 2025, with Perth and Sydney outperforming.
2025Outlook Pacific Market
01 LOW VACANCY
02 SUPPLY
SHORTFALL
03 RENT GROWTH
04 VALUES SUPPORTED
LIVING SECTORS
Capital city vacancy will fall by 2029 to 1.2%, from 1.9% in 2024.
The future supply of apartments is likely to hover around 50,000 per annum, well below long-run demand of circa 75,000 apartments.
CBRE expect median rents to grow by $170 per week (+25%) from 2024 to 2029. A number of precincts are likely to see mid to high 30% rental growth.
Over one third of CBRE’s residential valuers expect apartment values to grow over the next twelve months, with highest conviction in Brisbane and Perth. Newer builds of two-bed apartments are commanding a 20% to 30% premium over older vintages.
05 STUDENT ACCOM
06 SENIOR LIVING
The significant pool of unmet demand for PBSA is likely to persist, despite international student caps.
Retirement living units (ILU) are trading at an attractive 30% to 50% discount to homes in lose proximity. There is scope for increased penetration from current level of 11%.
01 GROWTH
02 INTEREST RATES
03 INFLATION
04 JOBS GROWTH
05 MIGRATION
ECONOMIC OUTLOOK
Australia’s economy will grow in 2025 but at a “below trend” rate of +2.3%. New Zealand’s economy is also expected to grow in 2025at a rate of 1.0%.
We foresee three interest rate cuts for Australia in 2025. Similarly, we see ten year bond yields falling to 4.2% by year end. Cuts are also likely in New Zealand during the second half of the year.
Australian inflation remain in the low 2% range in early 2025, with lower residential and electricity costs helping. New Zealand inflation is also expected to fall to 3% by end of 2025.
Unemployment rate may edge up slightly from current low levels of 4%. Both Australia and New Zealand are hungry for new workers and we expect migration will assist in filling vacant roles.
Australia and New Zealand have amongst the highest projected population growth in the coming decade. For 2025, 340,000 new migrants are expected to arrive in Australia. Migrant arrivals in New Zealand were circa 220,000 in the past year for a net migration gain of more than 120,000.
01 VOLUMES
02 INVESTOR INTENTIONS
03
DEBT MARKET
04 PRICING
05 BELOW REPLACEMENT VALUES
INVESTMENT OUTLOOK
We see investment volumes continuing to recover through 2025 Our forecasts are for +15% growth in 2025, led by office at +25% and 10% each for industrial, retail and hotels. We also foresee the recovery enduring in 2026 with +23% growth to circa $44 billion.
For 2025, investor intentions show a preference for net buying. Investors are largely focusing on core Sydney product, while adopting a selective view in markets such as Melbourne and Brisbane.
Lender investment preference continues to be dominated by the Industrial & Logistics sector, Residential Build-to-Sell, and Data Centres.
CBRE estimate office yields will tighten by about 100 bps from now until 2030, led by Sydney’s Core precinct. Logistics Super Prime yields will tighten by about 100 bps and National shopping centre yields by an average of 60 bps from early 2025 until late 2027.
Transaction evidence suggests pricing in 2024 was 30% below replacement costs. This should provide buyers with confidence and encourage buy over build strategy.
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Q-on-Q Pacific Barometer
In & Out Australia 2024
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Scan for the full ‘Australian Capital Flows 2024’ report.
AUSTRALIAN CAPITAL FLOWS 2024: A YEAR OF RESURGENCE AND OPPORTUNITY
The Australian real estate market demonstrated remarkable resilience and recovery in 2024, with total transaction volumes across key sectors reaching an impressive $29.2 billion. This represents a significant 21% increase compared to 2023, signalling a robust return of investor confidence and activity.
OFFICE SECTOR LEADS THE CHARGE
The Office sector emerged as the standout performer, achieving $8.4 billion in transactions, marking a substantial 56% year-on-year rise. This resurgence underscores the sector’s attractiveness, driven by significant discounts compared to peak pricing and replacement costs. Offshore investors, particularly from the United States, have shown a keen interest in this sector, contributing to its strong performance.
RETAIL SECTOR REBOUNDS
Retail also witnessed a strong rebound, becoming the second most active sector with transactions totalling $7.3 billion, a 34% increase from the previous year. This growth reflects renewed consumer confidence and the sector’s adaptation to evolving market dynamics.
INDUSTRIAL & LOGISTICS SECTOR MAINTAINS MOMENTUM
The Industrial & Logistics sector continued its upward trajectory, with $7.1 billion worth of deals, reflecting 14% growth year-on-year. The sector’s resilience is underpinned by sustained demand for logistics and warehousing space, driven by the e-commerce boom and supply chain optimisation.
LIVING SECTOR STEADY
The Living sector maintained its importance in the investment landscape, with $4.8 billion transacted in 2024, albeit only a modest 6% increase from 2023. Significant investments in student accommodation and build-to-rent projects highlight the sector’s ongoing appeal.
CHALLENGES IN THE HOTELS SECTOR
In contrast, the Hotels sector faced challenges, recording only $1.6 billion in transactions, down from $2.5 billion in the prior year. This decline reflects the sector’s ongoing recovery from the impacts of the pandemic and changing travel patterns.
OFFSHORE INVESTMENT SURGE
Offshore investment saw a notable increase of 37% in 2024, totalling $8.3 billion and representing 28% of total transaction volumes. The United States emerged as the leading source market, contributing $3.6 billion in property transactions—more than double the investment from 2023. Japanese and Singaporean investors also played significant roles, with $1.9 billion and $1 billion in transactions, respectively.
LOOKING AHEAD
With the prospect of interest rate cuts in the first half of 2025, investment activity is expected to continue improving as more investors look to increase their allocations to Australian real estate. The stability and transparency of the Australian market, coupled with population growth driving demand for real estate, will ensure Australia remains a priority market for offshore investors in the Asia Pacific region.
2024 has been a year of resurgence for the Australian real estate market, with strong performances across most sectors and a significant influx of offshore capital. As we move into 2025, the outlook remains positive, with favourable economic conditions set to further bolster investment activity.
2024 has been a remarkable year for Australian real estate, with significant growth across key sectors. We anticipate continued strength in 2025, driven by favourable economic conditions and robust offshore investment.
Tom Broderick
Head of Office and Capital Markets Research
+61 430 405 910 tom.broderick@cbre.com.au
Adelaide’s Patritti family is moving to selling its historic urban winery and two McLaren Vale vineyards, creating an opportunity to partner with one of South Australia’s fastest growing wine brands.
Patritti was founded in 1926 by Giovanni Patritti and is Adelaide’s only remaining 100% family owned, fully operational suburban winery and cellar door.
CBRE is appointed to manage the sale, with the family’s Dover Gardens winery and associated vineyards in Blewitt Springs and Tatachilla to be offered in one-line or as individual assets.
Interested parties may also opt to acquire the assets as a going concern, which includes the wine brand, labels, wine inventory, consumables, business goodwill, and related plant and equipment.
The Dover Gardens winery is located 12 kilometers from the Adelaide CBD and operates as a true ‘grapes to glass’ facility, with potential for further development opportunities pending council approvals.
The vineyards cover 68.95 hectares, with 27.31 hectares dedicated to Shiraz, Grenache, Cabernet Sauvignon, Mataro, and Muscat. They have secure water
licenses totaling 39.9 ML from underground sources and the Willunga Basin Water Company. Additionally, 28.75 hectares of the land is arable.
The Dover Gardens winery is situated on four freehold titles and has a land footprint of approximately 1.78 hectares with a 1,500 tonne crush capacity. Improvements include a moderate size bottling hall, warehouse, cellar door, office, workshop, cool room, storage shed and manager’s residence.
“Due to the winery’s sought-after location and being a large land footprint in a residential area within Adelaide’s inner southwestern suburbs, it also lends itself to further development opportunities,” says CBRE’s Ned Looker.
John Harrison adds, “The Patritti brand is highly respected due to the quality of wine and longstanding family history. We’re expecting interest from wine industry participants seeking to continue the legacy.”
The aggregation is being offered for sale as a going concern or as individual properties with the first stage of the EOI campaign due to close on Thursday, 6 March 2025, if not sold prior.
+61 404 335 267 john.harrison@cbre.com
AGRIBUSINESS
From
John Harrison
Head of Agribusiness
+61 404 335 267
john.harrison@cbre.com
Sector Spotlight
“Climate
& economy set to shape market dynamics”
• 2024 saw lower transaction volumes and increased listings due to economic challenges.
• Strong interest in natural capital, large-scale cropping, and irrigation assets.
• High-value buyers dominate, with future market strength influenced by climate and interest rates.
After a period of unprecedented growth in farmland values, 2024 saw the Australian agribusiness real estate market catch its breath with lower transaction volumes, an increased number of listings and extended transaction timeframes. Certain horticultural commodities, vineyard, winery and livestock grazing assets (which don’t represent a strategic acquisition target) have all experienced reduced competition due to ongoing economic headwinds, including fluctuating commodity prices, challenging seasonal conditions, increased operating costs and higher debt costs. We are also starting to see an increase in distressed assets coming to market, potentially indicating more property listings within these sectors.
In terms of sectors and areas in strong demand, natural capital - where environmental stewardship and carbon opportunities are key drivers, and large-scale dryland cropping assets and irrigation holdings with secure and large volumes of water continue to experience strong demand and competitive buyer activity. Other sectors that continue to experience good demand include poultry, agri-infrastructure and passive investments leased to blue-chip counter-parties.
Throughout 2024, the market segment which experienced the most liquidity and strongest sentiment was in the higher price bracket (at values in excess of $30 million).
Institutional and corporate agribusiness groups, overseas buyers (including pension funds), established family farming groups and highnet-worth individuals continue to dominate this space, often targeting large-scale assets that offer opportunities for diversification, operational efficiencies, or natural capital benefits. These buyers are generally less affected by short-term economic shifts and are focused on long-term returns.
Looking forward to 2025, rainfall and climate variability will play a significant role in influencing buyer confidence and regional market strength. In addition, the stabilisation or reduction of interest rates could revive buyer competition, especially in sectors currently under pressure.
In the event that commodity prices continue to rebound and further improve (particularly in the red meat and wool markets), we expect to see an immediate boost in demand - particularly for grazing and mixed farming assets.
NSW Major Riverina Orchards Sold Off-Market
RIVERINA CITRUS AGGREGATION
CBRE brokered the sale of the Riverina Citrus Aggregation which was sold offmarket in November 2024 on a ‘walk-in-walk-out’ basis.
Located to the west of Leeton in the Riverina region of New South Wales, the aggregation comprised two properties totalling circa 188 hectares of which approximately 158 hectares was planted to modern mixed citrus varieties including oranges, mandarins and lemons for domestic and export markets. The sale also included NSW Murrumbidgee River High Security entitlements and Murrumbidgee Irrigation delivery entitlements.
The orchards were privately owned and operated by the vendors to an industry best standard of management and included high-quality structural improvements and modern irrigation systems.
The aggregation is positioned within an ideal citrus growing climate featuring fertile soils, and is well located in proximity to renowned citrus packing and processing facilities in Leeton.
The aggregation was sold to an Australian based diversified agricultural asset management fund.
NSW Landmark Sale of Premier ‘Dellapool’ Horticultural Aggregation to GoFarm
NARRANDERA
The ‘Dellapool’ aggregation, a premier 2,681 hectare horticultural development asset along the Murrumbidgee River in the Riverina region of New South Wales, has been sold to GoFarm, one of Australia’s leading agricultural investment firms. This property, known for its substantial water entitlements, modern infrastructure, and significant agricultural potential, attracted considerable interest from both national and international parties.
Matt Childs, Director at CBRE Agribusiness, highlighted the unique attributes of the property and the success of the campaign.
“The sale of ‘Dellapool’ attracted considerable interest from both national and international parties. Given the quality of the infrastructure, the scale of the land, and the volume of water entitlements, this was a rare opportunity. We are delighted to have concluded this deal with GoFarm, who will undoubtedly be excellent custodians of the property.”
John Harrison, Managing Director of CBRE Agribusiness, also commented on the outcome: “Aggregations of this calibre rarely come to market, and ‘Dellapool’ stood out for its impressive scale
and high-quality infrastructure. We are pleased to have secured a sale with GoFarm, whose commitment to responsible agriculture and transforming underutilised assets aligns perfectly with the future of this property.”
James Auty, Associate Director at CBRE Agribusiness, adds: “The competitive nature of this campaign reflects the strong demand for large-scale irrigation properties in Australia. ‘Dellapool’ offered a fantastic opportunity for an investor looking to capitalise on the property’s versatility and water security.”
GoFarm, a leader in Australian agricultural investment, is dedicated to transforming undercapitalised assets into high-performing agricultural operations. Their approach focuses on land-use change, investment in technology, and sustainability. GoFarm’s acquisition of ‘Dellapool’ marks another milestone in their mission to enhance Australia’s agricultural productivity.
VIC Historic Ingleby Estate Primed for Restoration
Ingleby estate, one of Victoria’s most iconic rural properties, has been sold for more than $3 million after a successful Expressions of Interest campaign.
Located in Winchelsea, the elegant Italianate style bluestone mansion and its 100 acres of fertile land attracted significant interest from prospective buyers, with multiple inspections and expressions of interest.
The sale was managed by CBRE’s Matt Childs and James Auty, who expressed their excitement for the future of the property.
“We are thrilled with the outcome of this campaign,” said Childs. “The level of enquiry was exceptionally strong, which speaks volumes about the significance of Ingleby as a heritage property, as well as the appeal of its location so close to Melbourne and Geelong.
“We had multiple expressions of interest and were delighted to see so many inspections take place. We’d like to sincerely thank the vendor for their cooperation throughout the sale process. It’s been a privilege to represent such a distinguished estate. The successful purchasers are deeply passionate about restoring Ingleby to its former glory, and we can’t wait to see what they do with this grand residence.”
Auty noted, “It’s not every day that a property like Ingleby comes to market, and the interest we received was a testament to its unique place in Victoria’s rural history.
The successful buyers have both the experience and determination to return this incredible estate to its original splendour. We’re truly excited for the next chapter in Ingleby’s long and proud history.”
Childs said the purchasers, whose vision for Ingleby includes restoring the mansion and re-establishing a botanic-like garden, have expressed their enthusiasm for revitalising this piece of rural heritage. “With their passion and commitment to maintaining the estate’s historical integrity, we are confident that the future of Ingleby is in excellent hands,” says Childs. “It will be exciting to see the property transform and continue to play an important role in the Winchelsea region for generations to come.” Matt
+61 407 053 367 james.auty@cbre.com
INTELLIGENT INVESTMENT
What will Happen to Companies that don’t Pursue the Green Route
The United Nations indicates that over 9,000 companies, 1,000 educational institutions, and 600 financial institutions have joined the net zero race.
While growing support for climate change action is necessary, the cost of this pursuit for specific industries is often a topic that receives lesser attention. For the property sector, billions of dollars are required to electrify building stock and eliminate embodied carbon in achieving net zero.
This is why green loans and sustainability linked loans have become increasingly prevalent in reflecting the property market’s commitment to responsible and sustainable lending. Green financing has notably been rewarding building owners with an interest rate discount and is fast becoming one of the keys to accessing capital in today’s competitive market. But what will happen to the companies that don’t follow this green route?
What’s at risk is beyond just brand reputation and is a topic explored in a recent Talking Property podcast featuring Nicole Yazbek-Martin of the Australian Sustainable Finance Institute, Rory Martin, former Vice President Group Sustainability for Frasers Property, and Daniel Sollorz, CBRE’s Debt & Structured Finance Head of Origination for New South Wales.
WHY COMPANIES ARE GOING GREEN
Simply put, the drive behind green loans and sustainability linked loans stems from a business environment, where access to capital is becoming harder and more competitive.
“Organisations who have their house in order are going to appear a lot more attractive and appealing to lenders who still need to do deals and get capital out there,” explains Rory Martin, former Vice President Group Sustainability for Frasers Property. “If you’re well-versed and responsible in how you approach green financing, you’re actually going to be more attractive because you can potentially attract a lower risk in that you’re managing your emissions. We know a lot of lenders now are seeking to reduce their
financed emissions or the emissions associated with their loan products. So, if you’re making their job easier by having a decarbonisation plan or similar, you’re going to be first in line.”
This isn’t just an educated guess from Rory, with numerous industry anecdotes detailing how organisations that are well-versed in this space are seen as more competitive and attractive. And naturally, where there are winners there are also losers.
WHAT HAPPENS IF YOU DON’T GO GREEN
While companies in Australia are receiving benefits for their green initiatives, there’s a bolder shifting sentiment in other parts of the world – it’s now an expectation from lenders that companies need to be committing to sustainability.
“If you’re not doing it, then it’ll be leading more towards a penalty, as opposed to a benefit,” says Rory. In industry speak, that equates to a green bonus versus a brown discount. And there’s evidence of this. “The Europeans penalise borrowers in a lot of cases where they’re not pursuing sustainability commitments within their facilities.”
“We’re also seeing a lot of the Asian banks on the other end still offering green benefits, and we’re seeing the Australians starting to shift to the middle ground where there’s still green benefits, but now with the introduction of brown penalties.”
Given the current trajectory, the experts have some advice for companies still on the fence about sustainability: Start thinking about how you’ll manage your ESG-related risk or at least begin asking questions, as the lending landscape begins to rapidly shift towards the penalty space.
WHY TAXONOMY IN GREEN FINANCING MATTERS
The word ‘tax’ often conjures thoughts of tedious spreadsheet tasks that no one wants to dedicate a weekend to. But in the property sector, sustainable finance taxonomy is actually a very simple concept: It’s a shopping list for the future.
Scan for more insights and to listen to the full ‘Talking Property’ podcast episode.
LISTEN NOW
“A sustainable finance taxonomy is a framework tool. It classifies and defines economic activities based on the sustainability objectives,” explains the Australian Sustainable Finance Institute’s Nicole Yazbek-Martin. “It identifies economic assets, activities, and investible measures across the whole economy. When we’re talking specifically about the property sector, those are activities that make a substantial contribution to climate change mitigation or what we can call net zero-ready.”
“It’s necessity is especially warranted in a world which is increasingly pursuing a transition towards a net zero economy. If we want to operate within safe climatic limits, then our whole economy needs to transform in a way that is aligned to a net zero outcome. What are the activities? What are the things that we need to do? How do we need to do things differently in order to be operating in that net zero world?”
“Knowing the answers helps investors and lenders speak the same language. It provides them with the confidence that when they’re assessing an asset, labelling something, or structuring a deal, that they’re aligning it to the activities that are driving the sustainability outcomes they’re seeking.”
Without this common language system, companies are constantly placed at risk of greenwashing. And if the sustainable finance taxonomy framework is something every stakeholder can agree on, it can potentially increase investor and consumer confidence along with more capital flowing through a more targeted approach.
BENEFITS OF AUSTRALIAN PROPERTY TAXONOMY
The pragmatic reasons for a sustainable finance taxonomy certainly exist, but given that many of today’s Australian borrowers are at different stages of their journey towards sustainability or decarbonisation, could a taxonomy also help them get their house in order? The short answer is yes.
“The taxonomies will bring a little bit of order to the chaos by providing a set of common language and objectives, so it gets everybody on the same page,” Rory confirms.
Beyond systematic harmony, a sustainable finance taxonomy could also bear other forms of fruit – extra finance flowing into the Australian market.
“I think it’ll certainly help with the appetite for sure,” says Daniel Sollorz, CBRE’s Debt & Structured Finance Head of Origination for New South Wales. Having been involved in the commercial real estate funding market for a while and reflecting on the last ten years, the level of sophistication has increased. The maturity and the innovation in funding solutions has seen a dramatic shift and improvement over that time.”
“One of the key concerns I hear when talking to lenders is how they think it through their origination requirements and what they’re looking at in the backend of their facilities. They can today look at what they’ve got, but in three to five years, the world’s going to be a different place. That could be in relation to values if an asset is more brown than what it is green. It could also do with the availability of debt finance at that time to repay the loan. So, the firmer and stronger the protocols are in place initially, lenders will gravitate to greater certainty.”
LENDER SENTIMENT ON GOING GREEN
Understanding how lenders view debt capital and green financing initiatives is a final key factor for decarbonising companies to be aware of.
“When you take a green loan or a sustainability linked loan opportunity to a lender, you’ll get the meeting organised very rapidly and receive very positive engagement,” Daniel confirms. “And that’s regardless of the opportunity - whether it’s acquisition, repositioning, repurposing - it’s across the whole range of opportunities.”
ALTERNATIVES
From Mark Granter
Executive Managing Director, Alternatives
+61 439 035 433 mark.granter@cbre.com.au
“Alternatives poised for dynamic growth & innovation”
• Strong ongoing appetite for Alternatives from private and fund investors in 2024 and expected to continue in 2025.
• Childcare and data centres will likely continue their robust performance.
• Renewables sector is set for accelerated growth, supported by significant investments in sustainable energy projects.
In 2024, we witnessed the strong ongoing appetite from private and fund investors in the various alternative sectors. Two of the standout sectors were Childcare and Data Centres. The Renewables sector is also gaining momentum, and this was recently highlighted by HMC Capital’s acquisition of Neoen’s wind, solar and battery assets in Victoria. This acquisition will form part of HMC’s new $2 billion energy transition fund.
During 2024 there was $657 million in childcare sales (up 26% since 2023), with the most dominant buyers being both local and Asian investors. Some of these sales are highlighted within this issue. Yields for this sector have remained very resilient compared to some of the more traditional sectors such as office, retail and industrial. CBRE sold some 14 childcare centres, with a total value of $162 million.
Sector Spotlight
From a Data Centre point of view, the majority of investment activity centred around major merger and acquisition (M&A) deals and land sales to Data Centre operators. The two standout transactions were the $24 billion sale of the AirTrunk business to Blackstone and the acquisition of Global Switch and iSeek data centre businesses by HMC Capital. A significant number of industrial sites were also sold to data centre operators, and we are likely to see more land sales to data centre operators in 2025.
An alternative sector that experienced some challenges in 2024 was the medical and healthcare
sector; however, this primarily related to the private hospitals due to the rising operating costs and pressure on their profitability. Unfortunately, there is no quick and easy solution, but we are confident it will get sorted out, as private hospitals play an essential role in the Australian health system. Most of the sales activity last year was associated with smaller medical/healthcare properties (sub $50 to $60 million).
CBRE transacted just over $200 million of healthcare assets at an average yield of 6.05%.
At the larger end, the Australian superannuation funds have been the most active, and a good recent example was the site acquired by ISPT and ART to develop the $585 million healthcare and life sciences hub in Sydney within the Camperdown Health, Education and Research Precinct.
In 2025, we expect sustained strong interest from private and fund investors across Alternative sectors. Childcare and Data Centres will likely continue their robust performance, driven by ongoing demand and digital infrastructure needs.
The Renewables sector is set for accelerated growth, supported by significant investments in sustainable energy projects. While the Medical and Healthcare sector may face challenges, particularly in private hospitals, investment in smaller healthcare properties is expected to remain steady. Overall, Alternative sectors are poised for dynamic growth and innovation in the coming year.
NSW Cremorne Childcare centre’s Sale Sets Record for 2024
PARRAWEEN STREET, CREMORNE
CBRE recently managed the unconditional exchange of a Cremorne childcare centre for $18.5 million –the biggest sale in the asset class for 2024 and the largest single childcare centre sale in NSW since 2019.
The centre, which was converted from its original office usage in 2013, is leased to Only About Children (OAC) with a 14-year WALE, current passing rent of close to $900,00 and fixed annual increases.
The property, located in Cremorne, NSW, was sold via an Expressions of Interest campaign by CBRE’s Australian Healthcare and Social Infrastructure Team of Sandro Peluso, Marcello Caspani-Muto, Jimmy Tat, Toby Silk and Angus Beevers. The price reflects a yield of 4.7%
Tat said a clear trend of heightened investor interest in this asset class had emerged over the past 18months. This momentum in the market has resulted in the team managing four of Australia’s largest freestanding childcare centre sales since June 2023 with prices ranging from $12.5 million to $20.5 million.
“There has been steady interest from domestic and international buyers in the past 18-months, but we are seeing an increased appetite for high-quality childcare assets from international groups. This is reflected in increased sale prices for the asset class and this campaign was no exception. While we had a greater number of high-net-worth domestic investors than international investors who engaged during the campaign, the international buyers were willing to go to a pricing to level that few local buyers were expecting,” Tat said.
Peluso adds, “Given the prime location and average annual growth in land values for the area, this was more than a standard passive childcare investment opportunity. Detailed investment summaries, inclusive of development and planning potential, land rates and alternative uses, were critical for demonstrating how this was a true generational holding for investors.”
VIC Brighton Childcare Centre Changes Hands for $16.5m
The property on South Road in Brighton East has been successfully sold for $16,500,000, achiev-ing a yield of 4.9%. This trophy asset, featuring a 20-year net lease and unparalleled long-term land bank prospects, has been acquired by a discerning investor, marking a significant transac-tion in one of Melbourne’s most coveted suburbs.
Situated just 11 kilometres from Melbourne CBD, Brighton is renowned for its desirability and strong demand in both residential and commercial sectors. The area has seen significant histori-cal land value growth, further enhancing the investment appeal.
Leased to Only About Children (OAC), a top-tier global childcare operator with over 80 campuses across Sydney, Melbourne, and Brisbane, the property provides a stable annual net income of ap-proximately $823,107 with fixed 3.25% annual reviews, ensuring consistent returns.
The property benefits from activity centre zoning, offering significant long-term value-add oppor-tunities.
The underlying land area of circa 1,879 square metres and the potential for an eight-level development, based on independent town planning advice, made this a highly attractive proposi-tion.
CBRE’s Healthcare and Social Infrastructure team of Sandro Peluso, Jimmy Tat and Marcello Caspani-Muto managed the sale. Caspani-Muto commented on the sale: “The gap between pri-vate and institutional or syndicated capital continues to close. With greater certainty of future economic conditions and a desire to grow assets under management, we will see these buyers become more competitive in 2025 once again. However, this being said, in this instance we had numerous private buyers – both local and international – competing for the property. These buyers offered unconditional terms and highly competitive cap rates. Understanding critical industry levers and being able to install more investor confidence in the childcare sector is key in achiev-ing true market success.”
INTELLIGENT INVESTMENT
Unlocking the Opportunities in the Healthcare Sector
According to CBRE’s recent report, the Australian healthcare real estate sector is poised for significant growth, driven by an ageing population and increasing healthcare demands.
GROWTH IN HEALTH PRECINCTS
One of the most promising areas for investment is in health precincts. These precincts, which integrate healthcare delivery, research, education, and accommodation, are becoming increasingly attractive. They not only drive rental and land demand but also enhance property values. The report highlights that precincts and clusters are essential for fostering innovation and collaboration within the healthcare sector.
HOSPITAL REAL ESTATE: A KEY PLAYER
Hospitals continue to be a significant component of healthcare expenditure, with their share expected to grow from 38% to 41%. Private hospitals, which consistently deliver 40% of healthcare activity, present unique opportunities for real estate investment. Historically, there have been limited opportunities to build scale through private hospital real estate trades. However, the development of public hospital precincts is creating new avenues for larger-scale public-private partnerships, attracting institutional investors.
FAVORABLE INVESTMENT CONDITIONS
Several factors make healthcare real estate an attractive investment. Long Weighted Average Lease Expiry (WALE), CPI-linked rent escalation, government and private health insurance backing, triple net leases, and high barriers to occupier relocation contribute to tight cap rates. These conditions are favorable compared to traditional asset classes, making healthcare real estate a compelling option for investors seeking stable and long-term returns1.
The Australian healthcare real estate sector offers a robust set of opportunities for investors. With the growing demand for healthcare services and the development of integrated health precincts, the sector is well-positioned for sustained growth. Investors looking to diversify their portfolios should consider the unique advantages and stability offered by healthcare real estate.
CBRE’s report, ‘Real Estate Opportunities in Healthcare’, provides an in-depth analysis of the current trends and future prospects in the healthcare real estate sector. The report offers valuable insights for investors looking to capitalise on this growing market. Explore the full report and gain a comprehensive understanding of the opportunities available.
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INTELLIGENT INVESTMENT
Australia’s Data Centre Investable Universe set to Double in Four Years
CBRE’s Australia’s Data Centres 2024 report estimates the Australian investable universe for Data Centres currently sits at $23 billion.
CBRE’s Australian Head of Industrial & Logistics Research and newly expanded role to include Head of Data Centre Research, Sass Jalili said with the current pipeline of committed projects and increased demand, largely driven by hyperscalers and adoption of AI, Australia’s investable universe will nearly double to $40 billion by 2028.
“Demand for data centres in Australia is increasing exponentially, key drivers for this are greater data generation and storage needs, growing adoption of cloud computing services, and advancements in technology, particularly the adoption of AI,” Jalili explains.
“Several global Data Centre operators have a presence in Australia, and their built-out capacity (megawatts), has been growing over the past decade. Both large and small players have expanded their server networks and upgraded data storage service facilities to meet rising demand for the industry’s services.
“CBRE Research have calculated there is close to 1,500MW (i.e. 1.5 GW) of built-out capacity in Australia. Sydney and Melbourne are the main host to most of the large data centres in Australia, mainly due to infrastructure and business activity. However, the current pipeline of committed capacity indicates significant investment being made in Perth, Brisbane and Canberra,” Jalili adds.
Australia is ranked fifth in the world, second in the Asia Pacific region, for data centre built-out capacity (megawatts) behind the Unites States, China, United Kingdom and Germany. The concentration of capacity is in Sydney (60% of national total), but the future pipeline indicates Melbourne’s capacity will more than double in the next five years.
Although there are significant projects in the pipeline, the increasing demand for Data Centres combined with limited supply availability is making the asset class very appealing to investors, says CBRE’s Pacific Data Centres Capital Markets Director, Darcy Frawley.
“Insatiable demand from major occupiers for data centre consumption, especially in the cloud and AI sectors, has driven the growth of the asset class,” Frawley said.
“Occupiers are now competing aggressively to increase their Data Centre footprint to accommodate future business needs. Australia specifically is set to see a large gap between capacity and demand in the medium term, which will lead to significant rental growth and make the sector even more appealing for Data Centre investors.”
The report also found land for data centres is now competing with the demand for industrial and logistics space, as the size of land required for Data Centres is growing.
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CBRE Welcomes Veteran Banker, Hugh Macdonald as Head of Capital Advisors, APAC
CBRE recently announced the appointment of veteran investment banker, Hugh Macdonald, as Head of Capital Advisors for Asia Pacific. Starting his role in Sydney, Macdonald will relocate to Singapore in the first quarter of 2025.
Macdonald joins CBRE from Deutsche Bank, where he was previously the Head of Investment Banking Coverage and Advisory for Australia and New Zealand. With extensive experience at institutions such as Citi, Morgan Stanley and Bankers Trust, he brings a deep understanding of real estate, gaming, leisure, and lodging sectors to his new position.
Renowned for his expertise in various financial products, including M&A, financing, and capital markets, Macdonald has successfully originated and executed numerous high-profile transactions across Asia Pacific, showcasing his strong cross-border experience.
Macdonald will report to Leo van den Thillart, Global Head of Investment Banking, and Greg Hyland, Head of Capital Markets, Asia Pacific.
“Our Capital Advisors business has experienced exceptional growth in Asia Pacific, raising over US$3.5 billion of capital in the past 18 months. With Hugh’s established relationships, we are confident in expanding our investment banking services across the region, providing top-tier capital markets, M&A, and strategic solutions to our clients,” said Hyland.
“I am eager to collaborate with my new colleagues to enhance the value we provide to our clients, meeting their diverse capital requirements and driving business growth throughout the Asia Pacific region,” added Macdonald.
INTELLIGENT INVESTMENT
Why Offshore Capital is Eyeing Australian Build-to-Rent
As Australia navigates the complexities of its housing market, the build-to-rent (BTR) sector is emerging as a promising solution. With the nation’s property sector poised for new opportunities and challenges in 2025, the interest from offshore capital in Australian BTR developments is noteworthy.
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In a recent episode of CBRE’s Talking Property podcast, industry experts Richard Carmont, Chairman of Arklife and Board Member of ADCO, and Andrew Purdon, Pacific Head of CBRE’s Living Sectors Capital Markets business, shared their insights on the burgeoning build-to-rent (BTR) market.
OFFSHORE CAPITAL EYES AUSTRALIAN BUILD-TO-RENT MARKET
As Australia navigates the complexities of its housing market, the BTR sector is emerging as a promising solution. With the nation’s property sector poised for new opportunities and challenges in 2025, the interest from offshore capital in Australian BTR developments is noteworthy.
GOVERNMENT INCENTIVES FUEL INTEREST
The Australian Government’s recent legislative changes have played a pivotal role in attracting offshore capital. New laws passed in late 2024 offer development tax incentives to BTR providers, including an accelerated deduction of 4% for capital works and a concessional final withholding tax rate of 15% on eligible fund payments.
These incentives come with conditions to alleviate the housing shortage, such as requiring operators to offer longer five-year leases, non-eviction without fault, and ensuring at least 10% of dwellings are affordable for lower-income Australians.
Richard Carmont, Chairman of Arklife and Board Member of ADCO, noted, “These legislative changes are a game-changer for the BTR sector. They provide the financial incentives needed to attract significant offshore investment, which is crucial for the growth and sustainability of this market.”
STRATEGIC APPROACHES TO
INVESTMENT
Richard Carmont attributes the successful transaction of Australian BTR projects to the experience and strategic approach of developers like ADCO, recalling the initial challenges of garnering interest from major investment houses in Hong Kong and Singapore. “We were getting interest without commitment,” he said. However, by leveraging internal capital to establish their first few assets, ADCO was able to demonstrate the viability of their model. This approach culminated in the sale of two Brisbane projects to the $256 billion Ontario Teachers’ Pension Plan and the US-based Hines, the world’s second-largest BTR player.
Carmont elaborated, “Our strategy was to build a solid foundation with our own capital, proving the concept and showcasing the potential returns. This gave confidence to larger investors who were initially hesitant.”
THE IMPORTANCE OF LEGISLATIVE STABILITY
CBRE’s Andrew Purdon, emphasised the importance of stability in legislation and taxation to foster long-term investment in the BTR sector. “To solve this housing crisis, we are really going to have to put intense capital in for long periods of time. This is not going to be a short fix,” he noted. Purdon also highlighted the need for sustained capital investment and stable policies to address the housing crisis effectively. “We need stability from both Federal and State in terms of the way the legislation and the taxes are working so people can understand them,” he added, “Investors need certainty. They need to know that the rules won’t change midway through a project. Consistent policies are essential for attracting and retaining long-term investment.”
FUTURE PROSPECTS FOR BUILD-TO-RENT
As the BTR sector continues to evolve, the sustained interest from offshore capital is a testament to its potential. With the right policies and strategic investments, BTR can play a crucial role in shaping the future of Australia’s housing market. The sector’s growth is not just about providing more housing but also about creating communities that offer stability and affordability for residents.
The future of BTR in Australia looks promising, with more international investors recognising the potential of this market. As Carmont pointed out, “The interest from offshore capital is a clear indication that Australia is on the right track. With continued support from the government and strategic investments, BTR can significantly impact the housing market.”
The BTR sector in Australia is at a critical juncture. With the support of government incentives and the strategic vision of developers and investors, BTR has the potential to significantly impact the housing market. As offshore capital continues to flow into this sector, the future looks promising for both investors and residents alike. The BTR model not only addresses the immediate housing shortage but also offers a sustainable, long-term solution that benefits the broader community.
Purdon
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From Simon Rooney
Head of Retail, Capital Markets, Pacific +61 418 284 680 simon.rooney@cbre.com
Sector Spotlight
“Opportunistic window for high quality assets remains open”
• Transaction activity in 2024 surpasses previous years.
• Re-entry of offshore and domestic institutional capital into the market.
• Investor focus continues to shift towards larger sub-regional/regional opportunities.
The Australian retail property market experienced a notable uptick in transaction activity during 2024, with a total investment volume of $7.97 billion, surpassing 2023’s $5.06 billion and 2022’s $6.55 billion. This growth highlights renewed investor confidence that the retail sector has bottomed and is positioned for growth following pricing and income recalibration, and the re-engagement from offshore and domestic institutional capital.
The increasing activity has largely been fuelled by motivated owners looking to close out redemptions and reset portfolios, with Institutional owners continuing to dominate the seller landscape in 2024. Major players like QIC, Dexus, Vicinity Centres, Future Fund, Stockland, and ISPT were responsible for 64% of a total $3.5 billion of the $5.45 billion in transactions above $50 million. QIC, for example, made strategic divestments in 2024, including a 50% stake in Claremont Quarter (WA) and a 100% interest in Westpoint Blacktown (NSW).
Private capital, led by firms like Fawkner Property, IP Generation, Revelop, Haben, and JY Group were again the most proactive investors, representing 56% of total acquisitions in 2024, down from 87% in 2023.
Vicinity Centres acquisition of Future Fund’s 50% interest in Lakeside Joondalup (WA) marked the reentry of domestic institutional capital into the regional shopping centre market, the first such acquisition since Scentre Group’s $720 million acquisition of a 50% stake in Westfield Eastgardens in Sydney in mid2018. Other key players such as Hines, GPT, and HMC Capital were involved in several high-profile deals in Q4 2024 contributing to over $2 billion in acquisitions by offshore and domestic institutional capital.
Renewed interest in this market sector was highlighted with seven regional and 16 sub regional retail assets
valued above $50 million transacting in 2024. These properties have become increasingly attractive due to their rebased, sustainable income profiles and robust performance fundamentals, making them highly compelling compared to other commercial property asset classes.
There remains significant liquidity for joint venture opportunities, with syndicators, private investors and domestic institutional capital acquiring 50% stakes in key retail assets totalling $2.4 billion ($1.6 billion of passive stakes and $0.9 billion of management stakes).
The positive outlook for retail real estate is supported by a subdued retail supply pipeline, with new developments reaching only 50% of the historical average and primarily driven by retailer-led developments from Coles, Woolworths, and Bunnings. Furthermore, rising construction costs, up 35%-40% from 2019 levels continue to limit the amount of new retail space coming to market contributing to a reduction in GLA per capita, driving up productivity.
Retail spending in Australia has seen significant growth, reaching $430 billion in 2024, a 54% increase over the past decade. CBRE forecasts retail sales to reach approximately $530 billion by 2030, growing at an annual rate of 3.5%.
With the prospect of interest rate cuts in the first half of 2025, overall investment activity is expected to continue to improve whilst several large regional transactions are currently underway, setting the stage for a strong start to 2025.
The overriding investor sentiment is retailer performance proves resilient, long-term retail fundamentals remain strong and the “opportunistic window” to acquire high-quality assets remains open, albeit closing given an increasing investor pool.
WESTFIELD TEA TREE PLAZA
A 50% stake in Adelaide’s Westfield Tea Tree Plaza and the adjoining Tea Tree Plus was acquired via a private fund jointly managed by Scentre Group and Barrenjoey Private Capital for $308 million.
Situated on a land rich site of 22.4 hectare within Adelaide’s growing north-eastern suburbs, the landmark centre located just 15 kilometres from the CBD provides significant future expansion potential, to cater for a growing catchment over the coming years.
The Westfield Tea Tree Plaza acquisition was followed by the launch of a new private fund, the West Lakes Opportunity Trust, as well as the acquisition of a 50% interest in Westfield West Lakes shopping centre in Adelaide for $174.8 million, also jointly managed by Scentre Group and Barrenjoey Private Capital.
CBRE’s Head of Retail Capital Markets exclusively negotiated both transactions totalling $482.8 million, on behalf of the Dexus managed funds.
Simon Rooney
+61 418 284 680 simon.rooney@cbre.com
Dexus (DWSF)
LAKESIDE JOONDALUP SHOPPING CITY
The acquisition by Vicinity Centres is the first such acquisition since Scentre Group’s $720 million acquisition of a 50% stake in Westfield Eastgardens in Sydney in mid-2018 and signalled renewed interest from both REITs and unlisted wholesale funds in this market sector.
CBRE’s Head of Retail, Capital Markets facilited the $420 million transaction on behalf of Future Fund.
Lakeside Joondalup is situated approximately 26 kilometres north of the Perth CBD on an expansive 23.8 hectare site, which accounts for a significant proportion of the Joondalup CBD.
The site provides significant flexibility and scale for both short term development and to create value in the long term via a mixeduse scheme. This would reinforce Joondalup CBD as the premier commercial, retail, civic and educational precinct servicing Perth’s burgeoning northern suburbs.
Lakeside Joondalup was competitively contested by a range of domestic groups given the centre’s outperformance, strategic growth corridor location, secure tenancy profile and the ability to capitalise on its exciting mixed-use development potential.
NSW 50% Stakes in Major Sydney Retail Shopping Centres
ROSELANDS CENTRE & CARLINGFORD COURT
Roselands Centre and Carlingford Court occupy significant high-profile metropolitan sites, providing a combined GLA of approximately 96,761 square metres, and generating exceptional centre turnover totalling more than $630 million per annum.
The Roselands and Carlingford acquisition demonstrates the continued demand for quality metropolitan, sub-regional and regional assets with a focus on non-discretionary spending. There is particularly strong interest in assets which offer mixed-use development potential and strategic value-add opportunities.
These transactions complete $2.4 billion in 50% interests in retail assets changing hands in 2024, including Lakeside Joondalup (WA), Claremont Quarter (WA), Westfield Tea Tree (SA), Westfield West Lakes (SA) and Warriewood Square (NSW), which were all transacted by CBRE.
Sale Price $287,000,000
Capital Value $2,966 per sqm
Sale Date Q4 2024
Interest 50%
Vendor Vicinity Centres
GLA 96,761 sqm
Site Area 180,030 sqm
Simon Rooney
+61 418 284 680 simon.rooney@cbre.com
Unearthing Real Estate Opportunities from AUKUS INTELLIGENT INVESTMENT
The AUKUS trilateral security pact, involving Australia, the United Kingdom, and the United States, has set the stage for a transformative era in Australian Defence infrastructure, focusing on the construction and operation of nuclear-powered submarines. This ambitious $268 to $368 billion project, spanning over three decades, is poised to take place at Osborne Navel Shipyard in Adelaide and HMAS Stirling in Perth. As a result, the real estate sector stands to witness a significant surge in demand across various precincts, encompassing logistics, living, retail, office, and social infrastructure.
PORT ADELAIDE PRECINCT: A HUB OF OPPORTUNITY
The Osborne Navel Shipyard, located near Port Adelaide, is at the heart of this monumental initiative. CBRE Research estimates substantial real estate demand in this precinct, driven by the influx of workforce and related activities. Specifically, the anticipated logistics demand is around 850,000sqm, equating to approximately ten years of historical supply. Additionally, office space demand is projected at 40,000sqm, residential units at 13,500, childcare places at 2,500, and hotel rooms at 400. As the construction of nuclear-powered submarines ramps up, quick-service restaurants will also see a rise in demand, with an estimated need for 11 new venues.
SOUTH WEST PERTH PRECINCT: EXPANDING HORIZONS
Similarly, the South-West Perth precinct, home to HMAS Stirling, is expected to experience a notable increase in real estate demand. CBRE forecasts an additional 150,000sqm of logistics space, 30,000sqm of office space, 11,000 residential units, and 20,000sqm of general retail space. The development and operations at HMAS Stirling, along with the potential creation of a naval shipbuilding and maintenance hub in Henderson, are crucial for driving this demand.
AUKUS: A CATALYST FOR REAL ESTATE GROWTH
The phased approach to the AUKUS submarine program underscores the multifaceted nature of this initiative. The initial phase involves constructing the
submarine yard at Osborne, South Australia, from 2023 to 2030, with a workforce of 4,000. Following this, the construction of nuclear-powered submarines will take place from 2030 to 2040, necessitating a workforce of 4,000 to 5,500. Concurrently, infrastructure upgrades at HMAS Stirling and Henderson, Western Australia, are scheduled between 2024 and 2030 to support the hosting of US and UK SSNs, employing around 3,000 workers.
The long-term operational phase, commencing in 2027, will establish the Submarine Rotational Force - West, hosting up to one UK and four US submarines, with a workforce of 500. These developments are set to significantly boost local economies, creating numerous direct and indirect employment opportunities.
GLOBAL COMPARISONS AND STRATEGIC INSIGHTS
A global perspective further highlights the uniqueness of Australia’s approach. Unlike European and North American counterparts, where submarine construction and operational bases are typically located in regional markets, Australia’s strategic decision to situate these activities near major population centres presents unique opportunities for real estate operators. This approach is akin to practices observed in the Asia Pacific region, where submarine construction occurs near shipbuilding and automotive manufacturing hubs.
ADELAIDE: A BLUEPRINT FOR REAL ESTATE DEMAND
The Osborne Shipyard in Adelaide is expected to catalyse significant real estate demand. The construction workforce of 4,000 and a manufacturing workforce of 5,500, are likely to generate an additional 13,000 indirect jobs. This translates to an estimated demand for 850,000sqm of logistics space, 40,000sqm of office space, 13,500 residential units, 2,500 childcare places, 400 hotel rooms, and 11 quick service restaurants. This surge in demand underscores the necessity for urgent real estate development in close proximity to the shipyard.
PERTH: PREPARING FOR EXPANSION
At HMAS Stirling in Perth, the expansion phase is poised to create 3,000 direct jobs, with a potential total of 10,000 including indirect employment. The resultant real estate demand is estimated at 150,000sqm of logistics space, 30,000sqm of office space, 11,000 residential units, and 20,000sqm of general retail space. Should the Henderson shipbuilding and submarine maintenance hub proceed, it could further amplify real estate demand in the region.
The AUKUS submarine program presents an unprecedented opportunity for the Australian real estate sector. Substantial demand is anticipated across logistics, living, retail, office, and social infrastructure, so strategic planning and timely development are crucial to capitalising on this transformative initiative. CBRE remains at the forefront of analysing and navigating these emerging real estate opportunities, providing unparalleled insights to stakeholders and investors.
For further information and expert insights, please contact our Research and Managing Directors at CBRE.
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Flint Davidson
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