More than 260 people tuned into RWC’s first Between the Lines Live webinar for 2024, where a panel of experts discussed the outlook for the commercial property market in the year ahead.
Ray White head of research Vanessa Rader hosted the webinar, and was joined by RWC (SC) managing director Samuel Hadgelias and Loan Market group executive Stephen Scahill who took a deep dive into commercial financing, and understanding the banks and institutions' appetite for lending in this current market, including second tier lending.
Mr Hadgelias said there were two words which described the 2023 commercial property market - challenging and inconsistent.
“There was a lot of uncertainty around interest rates and inflation was high,” he said.
“We had a lot of people who were interested in purchasing but struggling to get finance.
“People weren’t sure what to do, and when they’re not sure they tend to do nothing and wait and see.
“Despite the challenges though, we still saw some outstanding results in the market.
“As we head into 2024 already we’ve seen the sentiment change, there is more optimism and excitement from people.
“I think we’re going to see an increase in those transaction numbers and volumes as we head through 2024.”
Mr Scahill said the journey through 2023 wasn’t linear, with most of the action coming from the tail end of the year.
“After 13 consecutive rate rises people were sitting on their hands,” he said.
“But I think we’ve reached the end of the rises now and our brokers have reported the sentiment has already started to change.”
Ms Rader asked what the experts saw in the outlook for development sites in 2024.
“We’re getting daily reports around a lack of stock and a growing population and there’s a sense of urgency for these residential developments,” Mr Hadgelias said.
“Development sites had a rough few years and it was mostly a feasibility issue.
“If those construction costs continue to stabilise a little bit I think we’ll start to see a few more projects get off the ground this year, and more transactions come to market.”
Mr Scahill said there was some appetite from lenders.
“The appetite from the banks is for high quality projects in good locations, with developers who have a track record for delivering projects,” he said.
“There are also a range of non-bank lenders who are pushing hard in that space due to the amount of opportunities they’re seeing.”
Mr Hadgelias said he believed demand for alternative assets would remain throughout 2024.
“It’s such a broad category which includes so many different types of assets,” he said.
“With the current housing crisis, I have seen an uptick in demand for boarding houses. I'm marketing one at the moment and interest has been huge, once upon a time those assets were hard to lift.
“There is still a demand for childcare but we are seeing areas now which are starting to get oversupplied. I think it will be popular but it will be area specific.”
He said the biggest opportunities this year would come from any asset which had the opportunity to manage risk.
“For example, people love unit blocks and they still transact on strong cap rates,” he said.
“Vacancies are often quite low, but you have the opportunity to strata them and sell them down, or the opportunity to redevelop.”
When looking for finance, Mr Scahill said there was plenty of opportunity, it was just a matter of shopping around.
“It’s less property specific, and more about finding the right lender with the right appetite,” he said.
“Not everyone views each asset the same, it's good to shop around and see what terms you can attract.”
