Page 2 - Wealth-Adviser-Issue-124 (FWP)

ISSUE 124
NOVEMBER 2025

The importance of timing in property investment can scarcely be overstated.
Both KPMG and Firstlinks emphasise the cyclical nature of commercial property
returns and the risks of waiting too long to re-enter the market. As Bennett
cautions, “The biggest risk is missing out on some of these outsized returns

from core real estate by waiting too long.” Retail investors and advisers should
heed institutional moves, which often precede broader market recovery.

practical facets of property investment in Australia’s evolv- increasingly moving the property allocation that would have
ing landscape. historically been in big regional malls and putting it into this
convenience retail part of the market.”
Resilience and Opportunity Across Commercial Such defensive characteristics make these assets highly
Sectors attractive, especially against a backdrop of uncertain global
A primary driver of optimism in commercial property growth and inflation risks. Cushman & Wakefield’s outlook
comes from persistent demand interacting with tight supply notes that “defensive retail segments, supported by long-
pipelines. Sector performance data in the KPMG update and term leases and strong tenant covenants, deliver high levels
Firstlinks interviews point to challenges in bringing new of cash flow stability to investors.” KPMG case studies
property to market—a result of rising land values, skilled further show that balancing risk and reward—through diver-
labour shortages, and complex development approval sification across resilient sectors—remains a cornerstone of
processes. “Regardless of the commercial property segment, institutional investment strategies.
it’s very challenging to make feasibility stand up… so supply For retail investors, tracking these institutional trends
will slow down and demand will continue, and you get rents offers valuable guidance. By favouring assets with strong
going up,” Bennett explains. underlying fundamentals and defensive market positioning,
Office space, often seen as the sector’s “trouble child” advisers can help clients mitigate volatility and enhance
in recent cycles, has shown signs of stabilisation and even long-term wealth protection.
renewed growth in locations such as Sydney and Brisbane
CBDs. Firstlinks reports: “We’ve continued to keep our Risks, Recovery, and Timing in the Cycle
buildings almost full, typically a 3% vacancy rate, far lower The importance of timing in property investment can
than the PCA benchmarks.” Industrial real estate, buoyed scarcely be overstated. Both KPMG and Firstlinks emphasise
by the e-commerce boom and logistical demand, remains the cyclical nature of commercial property returns and the
among the strongest performers globally, with Cushman & risks of waiting too long to re-enter the market. As Bennett
Wakefield noting Australia’s place among the top 10 for low cautions, “The biggest risk is missing out on some of these
industrial vacancy rates. outsized returns from core real estate by waiting too long.”
Retail property, particularly the defensive convenience Retail investors and advisers should heed institutional
retail segment, draws robust investor interest. The prefer- moves, which often precede broader market recovery.
ence for properties serving everyday needs, such as well-lo- KPMG’s June 2025 update identifies key headwinds
cated Coles or Woolworths neighbourhood centres, is rooted for the sector: inflation risks, construction cost pressures,
in their irreplaceability and proven resilience. KPMG’s and ongoing supply shortages. Nonetheless, the market’s
market analysis confirms that shortages in new supply, gradual recovery from past valuation declines stands in con-
alongside densifying metropolitan areas, underpin strong trast to the sharp downturns observed in previous cycles,
rental growth and the enduring value of core assets. such as the Global Financial Crisis. Cushman & Wakefield’s
forward-looking analysis sees capital inflows persisting,
Defensive Investment Strategies: Lessons from particularly into assets with defensive characteristics and
Institutional Trends proven resilience across economic cycles.
Large institutions and sophisticated investors have Navigating recovery requires balancing optimism
recalibrated their strategies toward more defensive, with a clear-eyed assessment of risks and fundamentals.
diversified property exposures. Firstlinks highlights the Understanding the timing of entry, sector differentiation,
growing popularity of syndicates and convenience retail and broader macroeconomic influences will help advisers
funds, drawing significant capital from superannuation, and clients decide when and where to deploy capital for the
sovereign wealth, and global pension funds: “Investors are best outcomes.

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