Ray White believes that commercial property is going to be a good buy in 2025. Here are three reasons why.
Market at the Bottom of the Cycle
Many sectors have been weaker in 2024 and have reached the bottom of the property clock. Capitalisation rates have expanded significantly, creating attractive pricing compared to the compressed yields of 2021-2022.
Improved risk-reward
Current prices are based on risks like higher interest rates and economic uncertainty, meaning much of the downside has already been priced in. As central banks shift towards more accommodative monetary policy in 2025, refinancing opportunities could boost returns for assets secured at today’s prices.
Sector-specific opportunities
Each commercial asset class offers potential:
– Industrial: E-commerce demand supports good fundamentals.
– Office: Premium, well-located spaces suit evolving tenant needs.
– Retail: Neighbourhood centres are strong due to changing consumer behaviour.
– Alternative Assets: Data centres, healthcare facilities and self-storage show long-term growth trends.
