It has been some time since we provided an update on what and where we are seeing the market. The last title – one we are fond of, “the Credit Crowd” – certainly proved prescient.
As investors, we get the benefit of having one of the best seats in the market to observe capital flow. Stamford Capital Australia (“SCA”), our debt origination business, transacted over $2bn of loans for the first half of this financial year across the country and various asset classes.
Debt both follows, and forms, markets.
Add to that the fact we have approximately 20 active assets as investors, mainly as equity/joint owners.
2026 looks a hard one to read, though it is never easy.
The hope of interest rate cuts that existed in Australia more broadly in mid-2025 had all but evaporated by end of the year, now money markets are pricing two rate rises. Some swing, especially for real estate being a rate-sensitive sector. Unemployment remains low and the economy is pushing along okay in the face of an increasingly uncertain world.
This would suggest that yields for income-producing assets have bottomed and, if anything, have a bias to increase … though return and risk in other asset classes will have some bearing. That said, banks are actively and aggressively pursuing good-quality commercial real estate credit – some wind to the back.
As the title says, we’ve got to work if we’re investing in commercial development or income-producing assets. Given we can’t expect yield to be our friend (and we never have, by the way), it gets to income: investing in assets that house good tenants, provide decent WALE, and have some prospect for income growth … these filters do narrow the market, but opportunities do exist, CPF4’s first investment in the Sunbury large-format retail asset being an exemplar.
Development, then.
It’s never an easy game – we know this well from considerable experience. Always gotta work here: understanding and managing risk in construction and delivery has never been more acute than during this recent inflationary cycle.
That said, housing in Australia sells, for the obvious reasons.
We are pleased with the performance of all our active residential projects, which would comprise the better part of 2,000 dwellings. Sales are steady and in line, or in some cases well ahead, of feasibility revenue forecast.
Policy change in planning has certainly spurred activity in certain markets – a positive and a risk in equal measure given the resultant concentration of activity and supply competition … don’t think we’ll be building apartments in certain parts of Sydney’s Eastern Suburbs or lower North Shore any time soon.
We enter 2026 with a strong pipeline of investment opportunities. We intend to remain discerning and disciplined, given we are conscious of our investors’ trust and proud of our track record as we enter our 16th year. We’ll work for it and remain largely invested in equity and structured credit to generate enhanced returns … avoid the Credit Crowd.
