Article | Intelligent Investment
Where Australia’s booming population will deliver growth
A growing population will bring fresh opportunities to capitalise on the country’s diverse property sector.
March 5, 2025
Opportunities can come in many forms and in 2025 that’s set to be the case in Australia’s property sector underpinned by one dominant factor: population growth.
CBRE’s latest research figures from the 2025 Pacific Real Estate Market Outlook projects Australia's population rise to 31.3 million people by 2034 – a 15% increase.
This places renewed emphasis on how the property sector will cope, and more importantly, where the opportunities exist to capitalise on this. CBRE spoke to the new collective of property leaders at the helm of some of the country’s most respected property companies. Here’s where they see significant opportunities for investors.
“As much as we want to manage gearing and get debt costs down, it's really at the behest of the RBA. So that then turns us to which assets are going to provide good quality growth through underlying cash flows and are positively disposed to growth trends,” he says.
“And the underlying growth trend in Australia just comes back to population growth which I think is going to support all forms of real estate.”
Office is one area of opportunity for Growthpoint with Lees expressing his own optimism for the sector in 2025 and beyond.
“It's a sector where we've seen yields come off and across the asset classes, we've probably got the highest yield coming out of office today relative to all other opportunities that exist.
“There's the widest spread to the borrowing cost, so you can positively gear an office asset, and it's much harder to do that in some other asset classes now. From a growth perspective, we do believe that there's still one to two years of difficult leasing to come in office, but if you can be invested in the assets that get you through that next two years, there's a pretty optimistic pathway ahead.”
Leveraging the potential of office does has a caveat and Lees says it’s a matter of targeting the right markets. An example being Brisbane which is now seeing single digit vacancy rates with the Brisbane fringe seeing no supply under construction. At the other end, Melbourne has too much vacancy. Off the back of this, Lees has also identified the potential of city fringe office investment opportunities.
“They're deep markets that are very relevant to tenants that can get A grade space much more affordably than what they can in a CBD market. For tenants that don't need that CBD location, but want a high-quality corporate offering, they're usually getting larger floor plates. It's very attractive to those occupiers.”
Dexus CEO, Ross Du Vernet, is on the same wavelength. As Australia’s biggest office landlord, Du Vernet is fond of sectors where there's noise.
“Because that creates different views between buyers and sellers and that creates investment opportunities. And office is certainly in that realm.”
Du Vernet says that the ‘office is dead’ argument is over, alongside a tight labour market and businesses wanting to drive productivity. The key to all of this? People.
“You're going to see interesting performance metrics come out over the next few years. You could have the best premium grade building in the wrong location and it's not going to perform that well compared to maybe a good A grade building located in a very core location with good transport infrastructure and amenity. It doesn't all have to be in the building itself.”
“It’s an attractive time to invest. You don't always want to be investing when everyone else is right next to you on the bid. I think the fact that capital is a little bit harder to come by right now, that presents some interesting opportunities. You've got to sometimes cut a bit against the herd.”
What has his attention? Hard to access, high-quality assets in Australia.
“Right now, we find ourselves in a bit of a unique circumstance that you can get these high-quality assets - and I'm talking about the best assets in each of their category - at fair prices. Those high-quality assets are going to set investors apart in this next part of the cycle.”
And getting ahead of the investor crowd seems to be a wise decision according to GPT Group CEO, Russell Proutt, who says that 2025 will mark the return of a more balanced competitive dynamic in the Australian property market.
“Our view is that by the third quarter there's going to be much more transaction activity across all sectors. The current environment still offers the rare access to high quality trophy or forever properties that have strong, through-cycle, cash flow resilience underpinning enduring capital value. But the window will close quickly until the turn of the next cycle.”
“From a QIC perspective, we're in a position in Queensland and around the country where we have some fantastic opportunities to unlock those themes - but within precincts. This precinct concept is important to explore because you don't want single assets sitting out being orphaned. You want to be able to create precincts where you can have multi-asset style investments and get the scale that investors want and need from the investment opportunities that they have.”
QIC’s Brisbane Cross River Rail project serves as the perfect example of this as it provides mixed-use and multi-sector style development opportunities. Additionally, Coakley also believes that regional and sub-regional shopping centres are equally ripe for this style of thematic investing given the amount of land they occupy.
“When you look at some of the larger shopping centres that are within the CBD or within the confines of some of our inner suburbs, they are generally landlocked. When you’re out further, you are looking at large tracts of land.
“It’s the ability to combine things like living, distribution, education, healthcare, all the needs that we know the communities have. Some of these land holdings really give investors an opportunity to unlock a multi-sector precinct and benefit from the creation of communities.”
CBRE’s latest research figures from the 2025 Pacific Real Estate Market Outlook projects Australia's population rise to 31.3 million people by 2034 – a 15% increase.
This places renewed emphasis on how the property sector will cope, and more importantly, where the opportunities exist to capitalise on this. CBRE spoke to the new collective of property leaders at the helm of some of the country’s most respected property companies. Here’s where they see significant opportunities for investors.
Assets with underlying growth potential
Interest rate movements have created a lot of noise in the Australian market in recent times. That’s why Growthpoint CEO and Managing Director, Ross Lees, believes that the 2025 calendar year is going to be about finding assets with underlying growth around this.“As much as we want to manage gearing and get debt costs down, it's really at the behest of the RBA. So that then turns us to which assets are going to provide good quality growth through underlying cash flows and are positively disposed to growth trends,” he says.
“And the underlying growth trend in Australia just comes back to population growth which I think is going to support all forms of real estate.”
Office is one area of opportunity for Growthpoint with Lees expressing his own optimism for the sector in 2025 and beyond.
“It's a sector where we've seen yields come off and across the asset classes, we've probably got the highest yield coming out of office today relative to all other opportunities that exist.
“There's the widest spread to the borrowing cost, so you can positively gear an office asset, and it's much harder to do that in some other asset classes now. From a growth perspective, we do believe that there's still one to two years of difficult leasing to come in office, but if you can be invested in the assets that get you through that next two years, there's a pretty optimistic pathway ahead.”
Leveraging the potential of office does has a caveat and Lees says it’s a matter of targeting the right markets. An example being Brisbane which is now seeing single digit vacancy rates with the Brisbane fringe seeing no supply under construction. At the other end, Melbourne has too much vacancy. Off the back of this, Lees has also identified the potential of city fringe office investment opportunities.
“They're deep markets that are very relevant to tenants that can get A grade space much more affordably than what they can in a CBD market. For tenants that don't need that CBD location, but want a high-quality corporate offering, they're usually getting larger floor plates. It's very attractive to those occupiers.”
Dexus CEO, Ross Du Vernet, is on the same wavelength. As Australia’s biggest office landlord, Du Vernet is fond of sectors where there's noise.
“Because that creates different views between buyers and sellers and that creates investment opportunities. And office is certainly in that realm.”
Du Vernet says that the ‘office is dead’ argument is over, alongside a tight labour market and businesses wanting to drive productivity. The key to all of this? People.
“You're going to see interesting performance metrics come out over the next few years. You could have the best premium grade building in the wrong location and it's not going to perform that well compared to maybe a good A grade building located in a very core location with good transport infrastructure and amenity. It doesn't all have to be in the building itself.”
Playing the cycle the right way
With a macro lens over the current market, Du Vernet says that it’s the perfect time in the cycle to be investing with ideal conditions lining up.“It’s an attractive time to invest. You don't always want to be investing when everyone else is right next to you on the bid. I think the fact that capital is a little bit harder to come by right now, that presents some interesting opportunities. You've got to sometimes cut a bit against the herd.”
What has his attention? Hard to access, high-quality assets in Australia.
“Right now, we find ourselves in a bit of a unique circumstance that you can get these high-quality assets - and I'm talking about the best assets in each of their category - at fair prices. Those high-quality assets are going to set investors apart in this next part of the cycle.”
And getting ahead of the investor crowd seems to be a wise decision according to GPT Group CEO, Russell Proutt, who says that 2025 will mark the return of a more balanced competitive dynamic in the Australian property market.
“Our view is that by the third quarter there's going to be much more transaction activity across all sectors. The current environment still offers the rare access to high quality trophy or forever properties that have strong, through-cycle, cash flow resilience underpinning enduring capital value. But the window will close quickly until the turn of the next cycle.”
Investing in creating new communities
With greater population comes the need for new communities. QIC Real Estate’s Managing Director, Deb Coakley, believes that certain thematics are driving property investment decision making, a move that will help underpin the creation of future communities. The specific thematics being the current headwinds in the living sector and the advancements in AI and technology.“From a QIC perspective, we're in a position in Queensland and around the country where we have some fantastic opportunities to unlock those themes - but within precincts. This precinct concept is important to explore because you don't want single assets sitting out being orphaned. You want to be able to create precincts where you can have multi-asset style investments and get the scale that investors want and need from the investment opportunities that they have.”
QIC’s Brisbane Cross River Rail project serves as the perfect example of this as it provides mixed-use and multi-sector style development opportunities. Additionally, Coakley also believes that regional and sub-regional shopping centres are equally ripe for this style of thematic investing given the amount of land they occupy.
“When you look at some of the larger shopping centres that are within the CBD or within the confines of some of our inner suburbs, they are generally landlocked. When you’re out further, you are looking at large tracts of land.
“It’s the ability to combine things like living, distribution, education, healthcare, all the needs that we know the communities have. Some of these land holdings really give investors an opportunity to unlock a multi-sector precinct and benefit from the creation of communities.”
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