Citi Highlights Australian Real Estate as Attractive Growth Opportunity Amid Strong Demand-Supply Fundamentals

January 06, 2025 01:12 PM AEDT | By Team Kalkine Media

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Citi Highlights Australian Real Estate as Attractive Growth Opportunity Amid Strong Demand-Supply Fundamentals — Image source: Shutterstock

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Highlights

Strong Demand-Supply Dynamics: Citi reports that the Australian real estate sector remains a relatively attractive growth opportunity, driven by strong demand-supply fundamentals.

Favorable Market Conditions: Low development supply, resilient local consumer demand, and growing immigration-driven population growth are key factors supporting the sector’s outlook.

Positive Investor Sentiment: Citi anticipates rising investor interest in the physical markets and increased corporate activity in 2025, particularly in retail real estate.

Citi has identified Australia’s real estate sector as a strong growth opportunity, bolstered by favorable demand-supply fundamentals. The brokerage highlights that the sector’s low development supply is well supported by strong underlying consumer demand, which is further amplified by a resilient local consumer base and a growing population driven by immigration.

On Monday, the AXRE index representing the sector saw a 1.1% increase, signaling positive momentum within the market. According to Citi, the real estate sector will likely continue to benefit from increased investor interest in physical markets throughout 2025. This trend is expected to be supported by higher corporate activity, especially in the retail real estate sub-sector, alongside solid valuations and growth in funds management platforms.

Major players in the sector such as Dexus (ASX:DXS) and Goodman Group (ASX:GMG) saw respective gains of 0.7% and 1.5%, reflecting strong market confidence in the industry’s prospects.

Citi's analysis suggests that the combination of favorable market dynamics and ongoing investor interest will ensure that Australia's real estate sector remains a key growth area moving forward.

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