2025 will be a turning point for real estate M&A in ANZ

Last year, the ANZ real estate M&A market exhibited a two-fold pattern: a subdued first half followed by a gradual recovery in the latter part of the year. 

According to data in the Ansarada Deals Platform, while global deal activity experienced a 5% year-over-year decline, the ANZ region demonstrated resilience, with some sectors showcasing significant growth. This regional strength is evident in the modest 2% decrease in deal volume observed in ANZ, contrasting favorably with the global trend.

This article provides a glimpse into the key trends shaping the ANZ real estate M&A market in 2025. For a more in-depth analysis, including global market forecasts, download our comprehensive 2025 Global Real Estate M&A Outlook Report. The report dives deeper into the factors driving deal activity, identifies emerging global opportunities, and provides valuable guidance for deal makers in the real estate sector. 

Diverging trends: ANZ outperforms global market

"Interestingly, Australian commercial property deal volumes are up YoY compared to the Ansarada Deal Room activity which is down 2%," notes Sam Linden, Director at JLL. "This could be partly attributed to an increase in off-market deal activity being done without a formal data room, which would align with our experiences this year witnessing a decrease in formal campaigns in the retail sector over 12 months ending September 2024."

Linden further observes that while off-market activity typically increases in changing markets due to reduced bidder competition, recent formal campaign data has demonstrated increased bidder depth in the second half of 2024. This suggests a positive outlook for the coming quarters, with a likely return to more formal processes as capital availability and investor confidence grow.

Retail sector resurgence

The retail sector has been a standout performer in real estate M&A in ANZ, exhibiting a remarkable resurgence. "We’ve seen in the retail shopping centre sector in Australia and New Zealand that bidder depth is up approximately 60% for H2 2024 (vs 12 months ending 30 June 2024)," highlights Linden.

This surge in investor interest signifies a growing appetite for retail assets, driven by robust population growth and a limited pipeline of new supply.

Positive outlook for industrial and office markets

"I am very optimistic about 2025," states Sachin Dave, Head of Analytics at 151 Property. "I think we’ll start seeing stronger deal flow from Q2’25, and I expect this to be across the board." Dave points to the positive outlook for industrial assets, stating that "Industrial yields should bottom out with a long runway for infill rent growth."

While he acknowledges that larger industrial properties may not experience the same level of rent growth, their strong performance will continue to drive investment.

The office market is also showing signs of recovery. "Premium and A-grade CBD offices are already performing reasonably well," explains Dave. "With an increase in back to office mandates, as well as fringe CBD tenants taking the opportunity to find good deals to move to the city, prime assets will perform well, again driving investment."

Dave further emphasizes the appeal of the retail sector, stating that "Although inflation is stubborn, I think retail sales will grow well into 2025. Additionally, there is an extremely limited pipeline of new supply."

Navigating market dynamics

Astrid Beemster, Partner at Norton Rose Fulbright, provides valuable insights into the market dynamics. "In Australia, the third quarter of 2024 showed a cautious recovery from what has been a broadly flat or slightly stagnated market in this region for the past 12 months," she explains. The impact of interest rate rises and uncertainty surrounding pricing contributed to subdued deal flow across most sectors, particularly in core office transactions.

However, Beemster notes that certain asset classes, such as retail and industrial, have remained active. "Our clients are increasingly expressing interest in alternative asset classes, in particular in the living sector – purpose-built student accommodation, build to rent and co-living," she observes.

Beemster highlights the continued interest of global investors in the Australian market, particularly given the slower market recovery in other regions. "I expect to see particular activity from the Australian superannuation funds, who have increasingly taken direct investment positions on real estate assets, including a willingness to participate in development projects," she states.

A promising future for ANZ real estate M&A

Looking ahead to 2025, the ANZ real estate M&A market is poised for significant growth. With stabilizing interest rates, growing investor confidence, and a favorable economic outlook, the stage is set for increased deal activity across the region.

The focus is expected to remain on core assets across key sectors, while alternative asset classes, such as the living sector, are anticipated to attract significant investor interest.