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The institutional property and health sectors in Australia ended 2024 with a high level of activity. At ANZ, we expect that to increase in 2025.
The biggest driver of activity across the space is the depth of liquidity in the market, coming from both local and international investors, and deployed through both equity and private credit. This is driving increased competition and robust valuations across several segments.
At ANZ, we expect structured deals in the space will remain competitively bid and in high demand throughout 2025. The challenge for participants will be selecting work best suited to their unique circumstances.
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The office sector is one that has not benefitted from high liquidity levels, with investor appetite influenced by less-then-favourable global conditions. At ANZ, we expect to see this recover through 2025, as replacement costs for premium and A-grade office exceed valuations. Lower-grade offices may continue to face challenges.
The prospect of interest rate cuts in Australia could offer relief and help galvanise activity in the space. Such a boost would extend across all sectors, but particularly in areas like purpose-built student accommodation, land-lease communities, and build-to-rent property.
The year 2025 is shaping up as another exciting one for businesses, with persistent inflation and geopolitical change creating a landscape of uncertainty and opportunity in the Asia-Pacific region.
The increasing speed of digitisation, dawn of the real-time economy, and shifting supply chains will all also have a role to play in shaping the macroeconomic environment.
At ANZ Institutional, we know business are looking to position themselves to take advantage of these trends.
As part of our Outlook 2025 series, we’re asking our subject-matter experts to provide insights into a range of complex areas from across close to 30 markets – helping you better understand how you can prepare for the New Year. We’ll be sharing the responses over the coming weeks.
The industrial sector, which has gone from strength to strength over the last few years, is another we expect to see strong ongoing activity in 2025.
The biggest challenge the property and health sectors currently face is construction costs, which continue to remain elevated and make it difficult for projects to be feasible.
Good-quality projects will be completed, but borderline transactions will be a different story. This is likely to differ between Australian states, with availability varying across borders.
The aged-care and private-hospital sectors, neither of which have fully recovered from the pandemic period, will continue to address the demands of an ageing Australian population in 2025. Labor shortages and a lack of capital expenditure are likely to be issues that will persist.
Jo Scotney is GM, Institutional Property & Health at ANZ
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