Logistics & Industrial Capital Markets 2024 Outlook Report

Current economic state of play and where is 2024 headed?

Mixed economic indicators; however, inflation continues to fall Across the key economic indicators, 2023 was very much a mixed bag, all of which had varying fortunes for the Australian L&I sector. High levels of inflation and the subsequent increases in the cash rate were the key talking points, the latter having a material impact on pricing as indicative funding costs rose above 6.0%. Inflation has come off its peak, and the monetary policy tightening cycle is widely viewed to have ended.

However, the impact of higher interest rates is yet to fully pass through the economy. While there is some disagreement from economists around the path for interest rates in 2024, the general consensus is that the RBA will pivot to rate cuts in late 2024. Together with 10-year bond yields falling from cyclical highs of almost 5.0% in November 2023, it will provide greater pricing certainty to investors in 2024 and encourage capital to re-activate.

Figure 3. Australia Inflation Forecast

-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%

RBA Target Band

Dec-2025

Dec-2023

Dec-2021

Dec-2019

Dec-2017

Dec-2013

Dec-2009

Dec-2015

Dec-2011

Dec-2007

Dec-2005

Dec-2003

Source: ABS, Oxford Economics, Cushman & Wakefield

Figure 4. Australia Interest Rate Forecast

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%

Dec-2014

Dec-2013

Dec-2015

Dec-2020

Dec-2022

Dec-2019

Dec-2016

Dec-2017

Dec-2025

Dec-2021

Dec-2023

Dec-2018

Dec-2024

Source: RBA, Oxford Economics, Cushman & Wakefield

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