This is Allens: Kate Towey

Kate Towey

Kate is a corporate and M&A adviser and leader of our Real Estate sector. This year, she was appointed to the Takeovers Panel, Australia's primary forum for resolving takeover disputes.

The pivotal moment this year for the real estate sector hasn't been a piece of legislation or a change in government policy. It's been how we've responded to an extraordinarily complex economic and geopolitical landscape. We've spent much of the year working with our clients to prepare for what lies ahead.

In the current market, we're seeing investors across many sectors exercise a significant level of discipline and hesitation. Despite having access to increasing pools of private capital that need to be deployed, investors remain cautious. That's particularly the case in real assets and real estate, where divergences between bid and ask prices are restraining activity.

It's tempting to compare this period to the GFC, but the situation is very different. Most companies have gone into this environment in better shape than they did in 2008. They're in a stronger position to hold on through quieter times. We're also seeing a lot of activity in restructuring and rationalising property portfolios so they're in good shape when the opportunities do arise. Companies are generally better equipped to endure a downturn, but they also stand to gain a lot more on the other side.

We're now in a market that holds significant opportunities for the real estate sector. I think we'll see investors move quickly when we can see some correction in valuations, together with a more stable interest rate and inflationary environment emerging. We're hearing from investors that the degree of certainty is what's missing.

Once activity in the market turns, I think we'll see investment fire up again quite quickly. For real estate, property and fund managers, there will be opportunities to access significant amounts of private capital at the right price.

In challenging times, relationships are even more important. We are fortunate to have clients that trust us to work with them through the uncertain times so we're ready to capitalise on the opportunities as they inevitably come.

Private capital growth against a backdrop of economic uncertainty

High interest rates, inflation and geopolitical instability have largely defined our market this year and kept investors hesitant, but pools of private capital have continued to grow. When opportunities re-emerge, we'll see significant investment, partnering activity, take-privates and mergers. We expect to see the tide turn in the next six months.

Reallocation of capital

Due to a number of global factors, including uncertainty in China, there's been a noticeable reallocation of capital towards markets that are perceived to be stable, including Australia. This shift presents significant growth opportunities for Australian markets and offshore investors alike, with Australian real estate managers likely to gain access to considerable amounts of private capital.

Societal shifts changing the face of real estate

Economic concerns have taken the limelight this year, but societal trends are also having a massive ripple effect on the real estate market. A growing population and changes in the way people are living and working are creating new pressures, with our housing shortage worsening and cost of living increasing. It's never been more important for us to work alongside our clients, and really understand their businesses, so we can help them understand the opportunities and capitalise on them as they inevitably arise.