REGISTER FOR CO-INVESTMENT OPPORTUNITIES
interest rate cuts australia

Interest rate cuts offer a turning point for commercial property investment

The last few years have presented challenges for commercial property investors. With interest rates climbing to combat inflation, many have seen their income returns dip and commercial property values plateau. As the market shifts and interest rate cuts loom, uplift is on the horizon.

2025 Outlook

Broadly, economists forecast that interest rates will drop in the first half of this year, possibly as soon as later this month, marking a critical turning point for investors. This shift presents a unique opportunity to position yourself for both immediate income gains and long-term capital growth.

Here’s why the upcoming interest rate cuts matter and why now is the time to act.

Key Impacts of Interest Rate Cuts

1. Higher Income Returns

Incomes generated by commercial property funds that are leveraged with debt are closely tied to interest rates. When interest rates are high, the actual cost of the debt is increasing, which in turn lowers the income returns for investors. As the cost of debt reduces, the income that flows from the property funds will increase.

2. Falling Term Deposit Returns

As interest rates drop, so do the returns of various investment options such as term deposits. Investors therefore look for alternatives and often look to commercial property, thereby increasing competition in the market.

3. Increased Property Values

As market competition increases, so do the values of the underlying assets. In Perth, where demand for quality commercial properties remains strong, this correlation is even more pronounced. A small shift in rental yields can significantly elevate property valuations.

Getting ahead of the curve

Waiting for interest rate cuts to take effect might seem prudent, but history tells a different story. The strongest returns often come to those who invest ahead of the curve. By securing a foothold in today’s market, you position yourself to reap the benefits as conditions improve.

Looking at the historical relationship between interest rates and commercial property income returns provides valuable insights. During previous rate-cutting cycles, Australia’s commercial property market saw a sharp uptick in both income and asset values – underscoring the cyclical nature of the market.

For context, the average annual return on commercial property in Australia is between 5% and 12%, depending on location, type of property and market conditions. Investors who enter during downturns often achieve superior long-term results compared to those who wait for the market to recover.

Our rigorous due diligence ensures that every property we select is poised for strong performance, even during times of uncertainty. However, understanding market cycles can enhance your returns. With interest rate cuts on the horizon, income returns and property values are set to rise, making now a great time to consider commercial property within your investment allocation.

Interested in discussing co-investment opportunities?

Unit 1, 10 Geddes Street
Balcatta Western Australia 6021
P: +61 08 9240 8632
E: info@agem.com.au

Commercial Property Investments Mark Borrello

Mark Borrello

Non-Executive Director

Specialising in Property law, Mark is an authoritative voice on the board at AGEM.

With significant experience in commercial leasing and retail leasing, he has acted for some of Australia’s largest real estate developers and landowners.

With his depth of expertise, active management style and considered approach, all legal matters for AGEM are expertly handled. Mark’s advice on property structures and his prudent risk analysis offer AGEM clients complete peace of mind.

Lisa Evans

Lisa Evans

Group Accountant

Lisa works closely with Adrian Fiore, overseeing all aspects of financial reporting, compliance, budgeting and cash management for AGEM projects and group entities.

Lisa is a Certified Practicing Accountant with over 30 years of experience in various industries.

Jan Radu

Jan Radu

Business Operations Manager

Jan plays a critical role in ensuring AGEM runs efficiently. For the past 10 years Jan has provided executive support to Adrian Fiore and overseen office management and investor administration.

Her experience, care and impeccable organisation skills ensure that our investors have a seamless experience from the moment they join us.

Jan has previously held similar roles in industries including fashion, textiles, carpentry and construction.

Commercial Property Investments Jacqueline O'Shea

Jacqueline O’Shea

Asset Manager

Jacqui is a key contact for both prospective and current tenants and works across AGEM’s property portfolio to ensure high standards for the operations and performance of our assets.

Jacqui has over 16 years of experience in the Perth property market with a focus on the management and leasing of commercial and retail properties. Her depth of knowledge paired with her passion and attention to detail is invaluable for investors and tenants alike.

Lani Weston

Brand Experience Manager

Lani leads the management of AGEM’s brand, marketing and strategic communications and engagement activity.

Lani has over 10 years’ experience specialising in strategic communications within property and construction. She’s passionate about bringing AGEM’s values to life in every touchpoint, ensuring investor resources, communications and events are of the highest quality and that the AGEM investor experience is more than simply a financial transaction.

Lani has a Bachelor of Commerce (Marketing & Public Relations) and Bachelor of Art (Graphic Design) from Curtin University and has completed her IAP2 Certificate in Community Engagement.

Commercial Property Investments Ben Graham

Ben Graham

Senior Asset Manager

Ben leads the management of AGEM’s property portfolio, ensuring our assets perform well and our tenants are supported to succeed.

Ben brings over 15 years of experience in asset management, development, leasing and disposal across both public and private sectors. He’s equally analytical and practical and highly valued by our diverse network of partners for his collaborative and transparent approach.   

Ben has a Bachelor of Commerce from Curtin University, a Diploma of Financial Planning from Kaplan Professional and attained his GAICD certification upon successful completion of the Company Directors Course with the Australian Institute of Company Directors (AICD).

Book some time to discuss co-investing with AGEM

Please provide some initial details and we’ll be in touch with a booking link so you can find a time to chat that suits you.