2025: Investment Perspectives

Oyster’s General Manager – Investment, Steve Harris, shares his perspective on the year ahead.

Over the past two years, our efforts have been firmly centred on protecting long-term value. Challenges remain as we enter 2025 in a shifting economic cycle, but cautious optimism is also emerging as OCR cuts and interest rate adjustments gradually restore sector confidence.

Previous cycles tell us recovery will take time – property markets typically lag when it comes to rebounding valuation and tenant demand following a recession. Headwinds still persist globally and geopolitical tension is impacting all markets, including New Zealand.

However, as the property sector moves into the recovery phase, we are starting to see the right indicators: leasing momentum is improving, distributions are increasing across many of our Schemes, and good-quality, well-located assets are transacting again.

With this backdrop, our focus for 2025 is clear: managing risk, optimising value from our current assets, pursuing new opportunities and responding to shifting capital flows to deliver for our investors.

Unlocking new value

While full recovery of valuations, occupier demand, and investor returns will require patience, our portfolio has emerged in a strong position. Now is the time to unlock new value through continued asset optimisation.

We’re driving this through proactive leasing, value-add strategies, careful cost management, enhanced sustainability credentials, and exploring new ways to generate income. This will continue to drive growth and support valuation uplifts, setting our Schemes up for long-term success.

Importantly, our team is on the ground daily, working closely with tenants to understand their evolving needs. This plays a critical role in risk management and is also where some of the biggest opportunities lie by allowing us to anticipate and meet future demand as market conditions evolve.

Pursuing new opportunities
We are actively pursuing high-quality, well-located assets, with the most compelling opportunities expected in the second half of 2025 and beyond.

The retail property sector is showing fresh potential. The disruption of COVID and the rise of online shopping reset asset values. Surplus land surrounding shopping centres creates scope to develop new income streams, enhanced amenities and community value.

The office sector is demonstrating green shoots after a subdued four-year period. Many Asia Pacific markets, including Auckland, are bucking declining US and European office trends due, in part, to a more measured approach to remote work. Infrastructure improvements, such as Auckland’s City Rail Link, also support occupier demand and rental growth for well-located office properties.

The industrial and logistics sector remains hotly contested, driven largely by a lack of appropriately zoned land across key regions, solid occupier demand, and emerging opportunities on the back of road, rail, air and port enhancements.  

Previous cycles show that capital shifts back toward alternative asset classes like real estate as inflation stabilises and fixed interest returns decline. We know investors reallocating from term deposits will seek opportunities that deliver long-term growth and stability—areas where property investments excel.

Providing new avenues for growth and diversification to our investors remains a key area of focus, and while our core interests remain in industrial, office, and retail assets, we continuously evaluate emerging property sectors that align with the evolving demands of tomorrow’s economy.