Article | Intelligent Investment

Answering the most important capital markets questions for 2025

Our leading capital markets experts provide exclusive insight on what to expect in specific commercial sectors this year.

March 21, 2025

Aerial view of Sydney's city centre at sunrise, showcasing the dense cityscape with skyscrapers and the Sydney Tower.

A new year naturally brings renewed investment opportunities for commercial property in the Pacific. The key to capitalising on this relies heavily on understanding the dynamics of the current capital markets space.  

Flint Davidson, CBRE’s Head of Capital Markets in the Pacific, explains how 2024 was a clear precursor that demonstrated early signs of a recovery led by a rebound in transaction volumes.  

“This was seen across most of the sectors, with office volumes up a staggering 70% from the lows of 2023.”  

Pricing didn’t follow the trend with the broader market experiencing further price softening. This resulted in sectors like retail and office experiencing peak to trough value declines of more than 30%.  

“This was enough for the value-add and core-plus buyers to re-enter the market while the core money was slow to return,” says Flint.   

Other observations revealed that high-quality real estate outperformed all else from both a tenant and capital markets perspective.  

So, what’s expected for the capital markets in 2025?  

Here’s a snapshot of what CBRE’s leading industry figures have to say.  

Biggest challenge of 2025 



“The biggest challenge in 2025 is really to find product where investors are looking to deploy,” says Paul Ryan, CBRE’s Pacific Head of Capital Advisors. 

“Some of the sectors are purpose-built student accommodation (PBSA), self-storage, data centres and manufacturing housing.”  

Biggest opportunity in 2025 

“We’re about to enter into an interest rate easing cycle,” says Michael Simpson, CBRE’s Pacific Head of Hotels.  

“That will have a compressing impact on capitalisation rates. It’s going to have a stimulatory impact on corporate travel budgets and leisure travel budgets. We'll see cap rates going down and income going up. It’s the perfect storm for investors provided that those investors get into the market and get set now.” 

Where capital is coming from 



“The capital this year will continue to be supported from the domestic banks, which have been very strong in 2024, that will continue in 25 and 26,” explains Andrew McCasker, CBRE’s Pacific Head of Debt & Structured Finance.  

“The offshore and domestic banks really like the Australian market as do the offshore pension funds, mutual funds and superannuation funds. We’ve also got a large amount of capital coming into private credit funds out of sovereign wealth funds and United Arab Emirates.”  

What will happen with pricing 

The expert outlook is that Melbourne will continue to struggle with pricing while Sydney will  fair much better.  

“There’s so much capital going into Sydney,” says Chris O’Brien, CBRE’s Pacific Head of Industrial & Logistics. 

“There is no longer a premium for scale. From a pricing perspective, anything above $100 million is going to struggle, while anything under $100 million is going to do well. Brisbane is going to move a little better this year as well.” 

Which sector will outperform 



When it comes to stand out sectors in commercial property, CBRE’s Pacific Head of Alternatives, Mark Granter, highlights strength in three key property types.    

“The outperforming sectors in 2025 will be data centres, student accommodation, and retirement and senior living,” he says. 

 Adding to that is James Parry, CBRE’s Pacific Head of Office, who is equally excited about the opportunity for office.  

“It’s been repriced, and it looks like good value. Trends from overseas are really increasing and we’re seeing large-scale transactions starting to happen there and we anticipate that will also become the flavour here.”   

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