Despite a short-term dip in transaction volumes in the fourth quarter of 2022 and so far this year, international investors are expected to play a significant role in driving an increase in the number of deals in the second half, and into 2024.

The 2023 Asian Association for Investors in Non-Listed Real Estate Vehicles (ANREV) survey shows Melbourne is high on the international global shopping list, with residential, office and industrial all making the top 10 for preferred APAC City/Sector combination for global capital allocations.

The Victorian property market presents attractive fundamentals that should hold investors in good stead.

With the full impact of the pandemic behind us, positive migration is re-booting at higher rates than the pre-COVID era, the international student market is bouncing back (occupancy rates of student accommodation buildings are close to 100 per cent again), and government investment in infrastructure is at record levels.

High inflation will be a significant factor for investment decisions. The key criterion should be to source assets capable of generating income to ride through the cycle – regardless of sector – and focus on underperforming or underdeveloped buildings in fundamentally sound locations.

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Carefully chosen investments should emerge when market activity resumes at full volume.

When assessing opportunities, investors need to identify the difference between structural and cyclical changes. For example, e-commerce and the logistics market’s strength have fundamentally changed how investors look at warehouses.

Meanwhile, office markets are transitioning to hybrid working, but most agree there will always be a need for a physical workplace. Could now be the best time to buy an unrefurbished office building?

The other growing issue is finance. With the big-four banks tightening lending for commercial property, investors with greater access to equity reserves and innovative debt structures will be best placed to buy opportunistically in the post-COVID landscape.

There is a view that the Reserve Bank of Australia may have overcompensated with official interest-rate rises, and we may see a sharp bounce back by the end of this year.

However, if market players wait until the recovery commences, it could be too late to uncover real value.

It will take fortitude for commercial property investors to take the plunge in the next six months, but I see 2023 as a year of opportunity for those who choose to look through the short-term noise.

Josh Rutman is head of Victorian capital markets at JLL