AFR Property Summit: What top commercial real estate industry experts are looking forward to most

“We are currently in one of the most complex operating environments for some time,” said Darren Steinberg, the chief executive of Dexus. “In many ways, the mix of geopolitical risks, global inflationary pressures and energy transition creates a more complex external environment than what we dealt with during the GFC in 2008.

“With these global events impacting the Australian real estate markets, it will be interesting to hear from our industry peers on how they will deal with these issues across the various sectors.”

It’s the uncertainty that’s also gripped the imagination of Sophie Fallman, managing partner of real estate at Brookfield.

“We’re confident about the Australian real estate sector but there’s no escaping the markedly changed conditions inherent in the market this year,” she said.

“I’m looking forward to discussing these and hearing from others on how they see the current landscape, as well as also discussing the latest views on ESG [environmental, social, and corporate governance] and net zero. These are exciting priorities for Brookfield.”

The impact and pressures on a world buffeted by climate change are certainly centre stage for many. Lendlease global chief executive Tony Lombardo said there was now “a real sense of commitment for Australia to take meaningful action to reduce our carbon emissions”.

“However, no single company or sector can hope to slow the rate at which our planet is warming,” he said. “Rather, it requires conversation and collaboration, and firm commitments. That’s why a forum like the AFR Property Summit is so important.”

These are challenging times and there’s a barrage of complex issues assailing the attention of property leaders, businesses, investors, owners, tenants, commentators and disruptors. But many are convinced that Australia is now emerging even stronger from the blight of the pandemic.

“The summit comes at a time when we are all assessing the outlook for our industry,” said Stockland managing director and chief executive Tarun Gupta. “While macroeconomic conditions remain uncertain, this year has provided plenty of valuable insight into the industry’s resilience, and I am optimistic about long-term opportunities for our industry.

“I’m looking forward to hearing from leaders on their own expectations, how they are leading teams through the current environment but also how we – as an industry – are converting the opportunities of the emerging trends in technology, sustainability, and the provision of affordable and diverse housing solutions to Australians.”

The commercial real estate industry is experiencing many of the same ebbs and flows of fortune. At Charter Hall, chief executive David Harrison says inflation has historically been good for commercial property as it pushes rents up either directly or indirectly.

“In particular, the economic rent required to make new developments feasible rises considerably with construction costs and yield on cost requirements,” he said. “This often means new building rents outpace existing rents, putting upward pressure on them, while new supply additions are curbed, thereby limiting vacancy rate expansion driven by new supply.”

He said he was also keen to hear more debate about listed versus unlisted real assets, and whether listed investors get a liquidity and volatility discount versus the often-quoted liquidity premium from listed markets.

It was difficult to forecast what would happen for the remainder of this year and into 2023, with the global economic and geo-political environment coupled with the pandemic, said Matthew Bouw, the Asia Pacific chief executive at Cushman & Wakefield.

“This should be an interesting area of discussion given the mix of attendees who are all grappling with the same challenge,” he said. “Also, our industry is at an exciting inflection point as we consider how work will be done in the future and the impact this will have on the office and the built environment more broadly.

“Against a backdrop of the global war for talent, the drive towards net zero, rapid developments in AI, virtual reality and the metaverse, the role of real estate has never been more important. I look forward to delving deeper into these areas during the summit.”

The hospitality sector has also been at the forefront of concerns as a result of COVID-19, especially with the tight labour market and long-term sustainability concerns, but here there is also a great deal of optimism. Pro-invest Group has been particularly active in the Australasian hospitality sector and has been heartened by the speed of its recovery.

“For us, it is a particularly exciting time with Australia’s economy rebounding well – better than most countries – and the hospitality sector is buoyant,” said managing partner Sabine Schaffer. “We are seeing guest volumes and forward bookings back to – if not ahead of – pre-COVID levels.

“It is clear that hotels have come into their own as an investible real estate asset class. Globally, Australia is seen as a highly attractive destination for investment in hotel assets and that’s reflected in the strong interest we’re seeing from institutional investors in Europe and elsewhere. Our institutional investors are looking for alpha returns and we’re well placed to deliver that through a combination of physical repositioning, hands-on operations and active management of hotel assets.”

At the coalface, Sarah Derry, the chief executive of Accor Pacific – Australia’s largest hotel operator – said the news, knowledge and vision that would be shared in the forum would prove priceless.

“The AFR Property Summit provides insights from leading experts on the outlook for commercial real estate,” she said. “I am interested to hear how the sector is looking ahead and anticipating change.