It’s set to be an interesting year in the commercial space after a bumper 2024. It will be interesting to see if growth tapers off or if the strong performance continues.

What is certain is that there will be strong competition for commercial loans by lenders - albeit we may see some of the major lenders being selective in the types of transactions they are willing to fund.

What that means is it may become more expensive - and more tricky - for purchasers of commercial property to land a deal with a major institution, due to the banks’ lower risk appetite and a more conservative approach to lending. Many of the deals that will be on offer for commercial mortgages in 2025 simply won’t stack up for purchasers.

Despite this, we still see plenty of funds out there that investors want to deploy into the commercial space across the coming year. This extra capital will still flow through to the market - albeit to a wider range of lenders.

One of the ways that’s happening is through real estate investment funds, such as Ray White Capital, which pool funds to put towards specific developments or projects.

We also expect to see a lift in the number of non-banks coming to the table in the commercial space, which are rising in popularity with commercial brokers across the country due to their flexibility and ability to adapt their products to the credit profiles of small-time investors and businesses, which is a win for anyone looking for a funding boost in the new year.

It’s a space we’ll be watching closely in 2025.