Market Outlook 2025

More interesting times ahead. Market conditions are still challenging, as multiple wars rage on abroad, and global trade conflicts heat up rapidly. Australia and New Zealand remain islands of relative stability, as local growth firms, inflation fades, and asset values bounce in 2025.

Scope for more stimulus. While rate cuts have started in New Zealand, Australia is very late to the stimulus party. Dashed expectations for 2024 rate cuts have delayed this recovery. We see modest rate cuts in 2025 as the catalyst for a firmer upswing ahead.

Capital choices. Investors are still voting with their feet, pushing further into private credit, to enhance portfolio returns and diversification. Meanwhile, a private equity real estate turning point is unfolding, as more investors return with greater confidence, looking for value.

Credit holds strong. Despite modest rate cuts ahead, we are still in a prime window for commercial real estate debt. The outlook is well supported by persistent housing undersupply, the improving construction outlook and an enviable blend of risk-adjusted returns.

Equity into recovery. Meanwhile commercial real estate markets are moving into a more durable cyclical turning point, even ahead of meaningful declines in borrowing costs. The pace of recovery will likely differ across markets, driving a clear need for astute sector selection.

Key themes for 2025. We expect a firmer upswing to take hold in 2025. Investors need to prepare for this upswing with the right strategies and the right sector exposures. In a world with more capital than opportunities, disciplined deployment will be the key to success.