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The five-year return outlook by sector
Where cap rates sit and where they're heading
The three signals we're watching most

Annual summary · FY2025-26

A rates-driven year; income carried the return.

Across the financial year just closed, our base case puts five-year total returns between 6.68% and 8.60% a year depending on sector — one of the widest spreads in years. The running yield is carrying total return; the action is in where capital values go from here.

Sector	5-yr return p.a.	Cap rate now	Chance of a capital fall
Industrial Strongest	8.60%	5.40%	16%
Alternatives	8.11%	5.87%	25%
Office	7.80%	6.32%	32%
Diversified	7.26%	5.55%	31%
Retail	6.68%	5.59%	39%

Three things we're watching

Industrial leads on risk-adjusted return — the strongest forecast and the lowest chance of a capital loss of any sector.

Office supply is collapsing — Sydney approvals are down 30.60% year-on-year, which supports the value of standing towers even while sentiment lags.

Retail carries the widest risk — the fortress centres hold their value; the average centre is where the downside sits.

This is the top line.

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