Falling interest rates will reshape the commercial property market in 2025, according to forecasts from multinational property group Savills.
“The expected pivot in central bank policy domestically will help to stabilise prices, yet some pressures will remain. The market will remain competitive for select asset classes and unlock new opportunities for value-add and opportunistic investors,” Savills said.
As rates fall, buyer activity is expected to increase, particularly among large institutional investors.
“An increase in motivated sellers and capital recycling is expected to boost market liquidity, enabling redeployment opportunities for investors with renewed or increased allocation targets,” Savills said.
“We will see increased appetite for risk among superannuation and pension fund investors as they become active players in land acquisitions for data centre, last mile industrial, land lease communities and even well-located prime CBD offices.”
Savills has also forecast an increase in land-banking activity in the industrial, residential, childcare and life sciences sectors, as long-term investors snap up sites that will be needed for future development projects. Meanwhile, the growth in artificial intelligence will lead to more demand for data centres in 2025. “The rapid expansion of data centres will also prompt more investors to raise capital or seek out new equity sources for these investments,” Savills said.
