Your investment journey awaits...

As a commercial property investor in Australia, the upcoming federal election presents two distinct paths for your portfolio's future. Which route will you explore?

Path A: The Immediate Stimulus Trial

Follow Labor's approach with fast-acting economic measures

 The upcoming Australian federal election on May 3, 2025 brings significant policy considerations for commercial property investors, developers, and stakeholders. While Labor's announced policies focus heavily on cost-of-living relief and social services, several initiatives could have notable downstream effects on the commercial real estate sector.

Housing construction and infrastructure

Labor's commitment to "the biggest ever housing build" will directly impact the construction industry, potentially creating pressure on labour availability and construction materials for commercial projects. However, this could also stimulate growth in retail and service-oriented commercial spaces in newly developed residential areas. The pledge to train more tradies could eventually ease construction cost pressures, benefiting commercial developers in the medium term.

Energy policy and sustainability

The $8 billion investment in renewable energy through the Clean Energy Finance Corporation expansion represents a significant shift that commercial property owners should monitor. This policy direction signals continuing regulatory pressure toward sustainable building practices and potentially stricter energy efficiency requirements for commercial properties. Forward-thinking investors may benefit from early adoption of green building technologies and energy-efficient retrofits.

Workforce and consumer spending dynamics

Several Labor policies could indirectly impact commercial real estate demand:

• Making Fee-Free TAFE permanent could accelerate workforce skill development in growth industries, potentially increasing demand for specialised commercial spaces.
• The 20 per cent reduction in student debt, coupled with lower repayment requirements, may boost discretionary spending among younger consumers, benefiting retail and hospitality tenants in commercial properties.
• Medicare expansion and increased bulk billing could support healthcare-related commercial tenancies, continuing the already strong performance of medical-use properties.

"Buy Australian" campaign

The $20 million "Buy Australian" initiative may modestly benefit commercial properties housing Australian manufacturers and producers. While relatively small in scope, this signals continued government support for domestic production, potentially supporting industrial property demand.

Retail and services outlook

The combined effect of tax cuts for all taxpayers, energy bill relief, and student debt reduction suggests increased consumer spending capacity. Commercial properties in the retail and services sectors could benefit from this increased disposable income, particularly in middle-market segments.

Conclusion

While Labor's announced policies don't specifically target commercial real estate, their collective impact could reshape demand across different property sectors. Healthcare, education, sustainable development, and Australian manufacturing may see increased activity, while broader economic stimulation through tax cuts and cost-of-living measures could support retail and service commercial spaces. Investors and stakeholders should carefully monitor both explicit property policies and these indirect effects when positioning their commercial property strategies for the post-election environment.

Path B: The Structural Reform Route

Navigate the Liberal-Coalition's longer-term business and regional focus

 The Liberal-Coalition's policy platform for the May 3, 2025 election, outlined in their "Let's Get Australia Back on Track" document, presents several initiatives that could significantly influence commercial property markets. While not specifically targeting commercial real estate, many of their core priorities would have downstream effects on the sector.

Economic growth and business-friendly policies

Peter Dutton's Coalition emphasises "back to basics" economic management with a focus on cutting government spending, reducing regulatory burdens, and supporting small businesses. This approach could create a more favourable environment for commercial property investors through:

• The commitment to "back small business" with extended instant asset write-off provisions ($30,000, up from Labor's $20,000) would allow commercial tenants to invest more in their spaces, potentially supporting higher-quality tenancies.
• The pledge to "cut red and green tape" could streamline commercial development approvals and reduce compliance costs, improving project feasibility.
• The promise to "reduce the tax burden on business expenditure" may improve business profitability, supporting rental stability for commercial landlords.

Housing and construction sector

The Coalition's housing policies, while primarily residential-focused, contain elements that would affect commercial property markets:

• Their commitment to "free up more than 100,000 homes in the next five years" and "unlock up to 500,000 new homes through new infrastructure funding" represents significant construction activity that could create temporary disruption but long-term opportunity.
• The proposed restoration of the Australian Building and Construction Commission to "tackle union corruption" that they claim has "contributed to driving up building costs by up to 30 per cent" could potentially reduce construction costs for commercial projects as well.
• Their focus on funding "essential infrastructure like water, power and sewerage at housing development sites" could unlock new commercial development opportunities in growth corridors.

Energy policy

The Coalition's energy strategy, particularly their nuclear energy plan, presents significant implications for industrial and commercial properties:

• Their proposed "balanced energy mix with renewables, gas, storage and zero-emissions nuclear" aims to deliver lower energy costs, which would benefit energy-intensive commercial operations.
• The plan to "establish integrated economic development zones centred on these new nuclear plants" could create entirely new commercial property opportunities near these energy hubs.
• Their commitment to "unlock more Australian gas" could benefit commercial properties in regional areas near gas development.

Migration and population growth

The Coalition's migration policies would directly impact commercial property demand:

• Their pledge to "reduce migration to sensible levels" by cutting permanent intake by 25 per cent and reducing international student numbers in metropolitan areas could dampen demand for office, retail, and student accommodation properties in major cities.
• This could simultaneously create new opportunities in regional centres as population and economic activity potentially shifts from metropolitan areas.

Regional development

The Coalition's strong emphasis on regional development could significantly reshape commercial property markets outside major cities:

• Their commitment to "invest in roads, rail and local infrastructure for communities and economic production" in regional areas could create new commercial property opportunities along these corridors.
• The pledge to "support existing regional industries to grow and foster new manufacturing and processing opportunities" suggests potential industrial property demand growth in regional centres.

Conclusion

The Liberal-Coalition's policy platform suggests a business-friendly approach that could benefit commercial property fundamentals through lower costs, reduced regulation, and potential regional diversification. However, their proposed migration reductions could dampen demand in metropolitan areas, while their emphasis on nuclear energy and regional development could create entirely new commercial property opportunities outside traditional metropolitan areas.

Commercial property investors should closely monitor how these policies might reshape demand patterns across different markets and property types, with particular attention to the potential for regional growth and the impact of reduced migration on metropolitan demand.