AUSTRALIAN PROPERTY INSIGHTS
VERTICAL COMMUNITIES
CHART 9
SECTOR ALLOCATION – GLOBAL OPEN-END CORE FUNDS
2,500
2,000
1,500
1,000
500
-
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Oce
Retail
Living
Industrial
Hotel
Senior Housing & Care
Source: MSCI
CHART 10
PROPERTY YIELDS BY SECTOR
0% 1.% 2% 3% 4% 5% 6% 7% 8%
BTR
PBSA
O ce
Industrial
Sub-Regional Retail
Source: Cushman & Wakefield Research
PRICING ANCHORED BY COMPARABLES Although transaction history remains limited, pricing
Most BTR valuations are still being underwritten on a build- to-core basis, and few stabilised assets have yet been tested through open-market trades. As more projects reach maturity, secondary market data will be critical in improving price discovery. With the rate cutting cycle underway, the pricing of debt available to investors will continue to improve and both commercial lenders and debt funds are keen to deploy. Competition among lenders should see more leverage offered, tighter margins an additional structures available to borrowers.
benchmarks are beginning to form – with stabilised BTR assets transacting in the 4.25–4.75% yield range. These yields are already converging with other institutional residential formats such as Purpose-Built Student Accommodation (PBSA) and boutique hotels. In some markets, BTR pricing has tightened even further, reflecting growing confidence in income quality and tenant retention. For many investors, this pricing signals that BTR is growing in relevance in diversified portfolios. That said, market transparency remains limited.
10
CUSHMAN & WAKEFIELD
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