Dexus Research released the Australian Real Asset Review Q3 2024, casting a spotlight on sector bright spots and reasons for investors to be more optimistic after a challenging and subdued year.

Key findings include:

Notwithstanding the challenge of high vacancy rates in the short term, the seeds of a medium-term recovery in office markets are being sown as new supply dries up. Office development commencements are forecast to fall 31% over the next three years, helping markets to rebalance. 

Retail (shopping centre) funds outperformed the other real estate sectors in a subdued year for unlisted property returns. Shopping centre portfolios are benefiting from relatively high yields, improving rents and renewed investor interest. Meanwhile, there has been an improvement in the Australian listed real estate index. 

An increase in office transactions was a feature in an otherwise slow real estate transaction market. Office transactions comprised 36% of total transactions in Q2 2024, up from 22% in the prior year. While prices are down on a year-on-year basis, recent sales indicate that market values are approaching a level where the market can function more normally. 

The value of infrastructure deals is down around 6% on last year. However, the number of deals was around 22% higher which may indicate that investors are finding smaller deals easier to get over the line.

Peter Studley, Dexus Head of Research said: "Real asset deal flow is projected to increase through calendar year 2025 as the interest rate cycle turns. While there is some uncertainty around short-term inflation pressures, most economists are forecasting interest rates to fall in 2025.”

To view and download the report click here.