Article | Intelligent Investment
Property’s most influential game changers in 2025
Australia’s property sector is set to be influenced by a host of new factors in 2025, and with that comes the need to identify the game changers that will help maximise return on investment.
February 24, 2025
2025 is set to be a pivotal year across the Australian property sector. It’s a bold outlook buoyed by talks of four key factors:
Whether it’s investors locally or from abroad, being aware of these major game changers in Australian property ahead of time is vital to maximising the potential for return on investment. Helping to identify these are a new collective of property leaders who recently took the helm of some of the country’s most respected property companies. Here’s what they know.
When it comes to interest rate movements, Du Vernet believes that a change in the rate cycle will unlock capital markets.
“We had record low rates and investment supply was quite constrained for a long period, and that meant that you had a mispricing of risk. You had B and C grade assets demanding similar cap rates to some of the best assets across all the real estate sectors, whether it was in retail, office, industrial. And that's all unwinding very quickly.
“I don't think anyone really knows where those prices are going to settle because the capital markets have not been functioning normally from buyers sitting on the sidelines. But I think with rates turning, you'll see that capital start getting deployed, and we'll see where prices hit.”
The only caveat to this scenario? A business can’t be built around bond yields being sub 2%.
“Good leasing, good operating expense management, good capex management and asset selection is going to be really important in this next phase of the cycle,” he says.
“Not all assets are going to perform the same.”
“Whether it's leasing capex to get a building up to standard in a commercial tower to re-lease it, or whether you're in a brown or greenfield site looking at technology and environmental credentials to build into your base building to future-proof it, all these factors are important and feature in the investment case,” says QIC Real Estate’s Managing Director, Deb Coakley.
With ROI in mind, Coakley has seen first-hand how technology and the types of assets they’re building are increasingly permeating daily conversations.
“People's tastes change, technology changes. What's important for us now is to not be in a position where the asset isn't agile enough to adapt to technology’s rapid change as well as the changing requirements of our tenants and our occupiers. That agility that you can build into an asset does come at a cost, but I think it's equally important to maintain the long-term investment value of that asset.”
Growthpoint Properties Group CEO, Ross Lees, also sees technology's potential, specifically the downstream benefits of AI integration.
From an operational perspective, Lees believes AI will make life easier in property.
“Everything from how you’re looking at reviewing leases and doing lease administration, to how you're thinking about tenant interfaces and tenant portals.”
The challenge will be how AI is governed in the sector, which still comes with a lot of implications.
“I think the efficiency potential of AI is very significant. When people start harnessing it, there'll be some great efficiency advantages coming through.”
“I draw parallels to what happened in the retail sector and its resilience during and through the recovery of the last cycle. We similarly believe that the predictions of the office sector's demise have been greatly overstated.
“The sector is currently stabilising, adapting to a new normal based on real estate fundamentals, whether it be location, quality and amenity. And while we have all seen the flight to quality, we see potential for a period of structural undersupply lifting the broader market as development economics impede new construction.”
Proutt indicates that governments are also supporting this revitalisation movement by investing in urban renewal initiatives that transform CBDs into more mixed use spaces.
“These programs integrate residential, cultural, and green spaces. They boost liveability and redefine the urban landscapes. You can see that not just in Australia, but around the world and we think this evolution will recalibrate the value of built form and the economics of new developments.”
The immediate challenge, according to Proutt, is in the pace of capturing the economics and realising the true underlying economic rents for assets.
“The fringe or metro markets can easily be poorly described and thought of as ramshackle buildings,” says Lees.
“The reality is that these are deep markets that are very relevant to tenants, allowing them to secure A Grade space much more affordably than they can in a CBD market. In Sydney, you’re paying, say, $700 a square metre for A Grade space in Crows Nest or St Leonards and double the price for equivalent space in the CBD.
“That’s very attractive for tenants that don’t need a CBD location but want a high-quality corporate offering.”
- Fresh interest rate movements
- Increased adoption of AI technology across the traditional assets
- How CBDs are being reinvented to thrive in modern times
- Potential of metropolitan offices
Whether it’s investors locally or from abroad, being aware of these major game changers in Australian property ahead of time is vital to maximising the potential for return on investment. Helping to identify these are a new collective of property leaders who recently took the helm of some of the country’s most respected property companies. Here’s what they know.
Interest rates set to unlock capital markets
Dexus CEO, Ross Du Vernet, has experience investing in real assets for over two decades. The company he heads manages a high-quality Australasian real estate and infrastructure portfolio valued at $54.5 billion.When it comes to interest rate movements, Du Vernet believes that a change in the rate cycle will unlock capital markets.
“We had record low rates and investment supply was quite constrained for a long period, and that meant that you had a mispricing of risk. You had B and C grade assets demanding similar cap rates to some of the best assets across all the real estate sectors, whether it was in retail, office, industrial. And that's all unwinding very quickly.
“I don't think anyone really knows where those prices are going to settle because the capital markets have not been functioning normally from buyers sitting on the sidelines. But I think with rates turning, you'll see that capital start getting deployed, and we'll see where prices hit.”
The only caveat to this scenario? A business can’t be built around bond yields being sub 2%.
“Good leasing, good operating expense management, good capex management and asset selection is going to be really important in this next phase of the cycle,” he says.
“Not all assets are going to perform the same.”
Technology’s impact on long-term investment value
Convenience of location is no longer the only dominating factor in a building’s long-term investment value. In 2025, technology and AI are becoming key drivers towards future-proofing assets.“Whether it's leasing capex to get a building up to standard in a commercial tower to re-lease it, or whether you're in a brown or greenfield site looking at technology and environmental credentials to build into your base building to future-proof it, all these factors are important and feature in the investment case,” says QIC Real Estate’s Managing Director, Deb Coakley.
With ROI in mind, Coakley has seen first-hand how technology and the types of assets they’re building are increasingly permeating daily conversations.
“People's tastes change, technology changes. What's important for us now is to not be in a position where the asset isn't agile enough to adapt to technology’s rapid change as well as the changing requirements of our tenants and our occupiers. That agility that you can build into an asset does come at a cost, but I think it's equally important to maintain the long-term investment value of that asset.”
Growthpoint Properties Group CEO, Ross Lees, also sees technology's potential, specifically the downstream benefits of AI integration.
From an operational perspective, Lees believes AI will make life easier in property.
“Everything from how you’re looking at reviewing leases and doing lease administration, to how you're thinking about tenant interfaces and tenant portals.”
The challenge will be how AI is governed in the sector, which still comes with a lot of implications.
“I think the efficiency potential of AI is very significant. When people start harnessing it, there'll be some great efficiency advantages coming through.”
The power of revitalised CBDs
The pandemic may have stripped the soul from many of the world’s iconic CBDs, but time has moved on and GPT Group CEO Russell Proutt believes that the next game changer lies in revitalised CBDs. Specifically, he believes they will reshape the market in 2025 and beyond.“I draw parallels to what happened in the retail sector and its resilience during and through the recovery of the last cycle. We similarly believe that the predictions of the office sector's demise have been greatly overstated.
“The sector is currently stabilising, adapting to a new normal based on real estate fundamentals, whether it be location, quality and amenity. And while we have all seen the flight to quality, we see potential for a period of structural undersupply lifting the broader market as development economics impede new construction.”
Proutt indicates that governments are also supporting this revitalisation movement by investing in urban renewal initiatives that transform CBDs into more mixed use spaces.
“These programs integrate residential, cultural, and green spaces. They boost liveability and redefine the urban landscapes. You can see that not just in Australia, but around the world and we think this evolution will recalibrate the value of built form and the economics of new developments.”
The immediate challenge, according to Proutt, is in the pace of capturing the economics and realising the true underlying economic rents for assets.
The true potential of metropolitan office
When identifying game changers, it’s equally important to account for the modern-day potential of assets beyond the CBD, where quality and value takes precedence.“The fringe or metro markets can easily be poorly described and thought of as ramshackle buildings,” says Lees.
“The reality is that these are deep markets that are very relevant to tenants, allowing them to secure A Grade space much more affordably than they can in a CBD market. In Sydney, you’re paying, say, $700 a square metre for A Grade space in Crows Nest or St Leonards and double the price for equivalent space in the CBD.
“That’s very attractive for tenants that don’t need a CBD location but want a high-quality corporate offering.”
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