The Year in Overview
If FY2024/25 was the year the Australian property market found its floor, FY2025/26 was the year it remembered how quickly conditions can turn.
While the financial year opened with genuine optimism with the Reserve Bank delivering three rate cuts across calendar year 2025 it closed with that early optimism tempered.
A resurgence in inflation, continued global instability and higher energy costs, saw the RBA reverse course from February 2026, lifting the cash rate back to 4.35% by May and unwinding the entirety of the 2025 easing cycle within a few short months.
Against that volatile monetary backdrop:
- We have seen Governments at every level doubled down on efforts housing supply (with varying degrees of success), culminating in the Commonwealth’s $47 billion Homes for Australia: A National Plan being released in May 2026.
- NSW and Victoria passed once-in-a-generation planning legislation.
- Transaction volumes surged into the end of calendar year 2025, with completed deal volumes across office, industrial and retail exceeding $50 billion up 8% from 2024.
- The energy transition continued to redraw the map of regional Australia, with the expanded Capacity Investment Scheme ($70 billion) underwriting an unprecedented pipeline of generation and storage projects.
For our clients – the year underscored a simple truth: in a market where the cost of capital can swing 75 basis points in either direction within a year:
- the winners are those who control what they can control; and
- planning pathways, deal structures, lease terms, land access and strategy have never mattered more.
We reflect on how the year unfolded across our key practice areas, and the priorities we see shaping the year ahead.
Residential Development and Greenfield Acquisitions
Housing dominated the policy agenda for a third consecutive year, and FY2025/26 delivered the most consequential set of legislative reforms the east coast has seen in decades.
At the federal level, the National Housing Accord’s 1.2 million home target remained the organising principle. The National Housing Supply and Affordability Council’s 2026 State of the Housing System Report forecast around 980,000 completions over the Accord period – an improvement on prior forecasts.
Approvals and commencements are trending up, but construction sector capacity remains the significant constraint. The Housing Australia Future Fund moved into delivery mode, with round three opening in January 2026 as the largest round to date with a focus on projects who could demonstrate delivery readiness.
The year closed with the release of Homes for Australia: A National Plan on 28 May 2026 – a $47 billion package that consolidates the Commonwealth’s housing programs, lifts total enabling infrastructure investment to $6.3 billion, and signals a coordinated, long-term approach across all levels of government.
Foreign investment settings tightened further. The temporary ban on foreign persons acquiring established dwellings, which commenced on 1 April 2025, was extended in the 2026/27 Budget through to 30 June 2029. Importantly for our developer and institutional clients, the exceptions to this ban remain significant, including acquisitions that materially increase housing supply, redevelopment plays, and purchases of existing build-to-rent assets that continue to operate as build-to-rent.
Structuring around these exceptions, and managing development conditions on vacant land, is now a core part of front-end acquisition due diligence.
In New South Wales, the Environmental Planning and Assessment Amendment (Planning System Reforms) Act 2025 (NSW) passed Parliament in November 2025 - the most significant modernisation of the Environmental Planning and Assessment Act 1979 (NSW) in its history. The reforms:
- established the Development Coordination Authority
- enshrined the Housing Delivery Authority (HDA) in legislation;
- introduced a new Targeted Assessment Pathway; and
- expanded complying development pathways for low-impact developments.
This significant reform on top of the Transport Orientated Development program (some 230,000 homes around 45 transport hubs), the Low and Mid-Rise Housing Policy (a further 112,000 homes), and the new $1 billion revolving Pre-sale Finance Guarantee for mid-tier developers, NSW now offers the most accelerated approval pathways in the country for well-located residential projects.
In Victoria, the reform program was equally ambitious. The Consumer and Planning Legislation Amendment (Housing Statement Reform) Act 2025 (Vic) and the Planning Amendment (Better Decisions Made Faster) Act 2026 (Vic) which took effect in November 2025 and February 2026 respectively – have been widely described as the biggest shake-up of the Planning and Environment Act 1987 (Vic) in decades, supporting the plan for Victoria’s target of 2.24 million new homes by 2050.
Critically for greenfield players, the Government’s 10-year plan for Melbourne’s greenfields sets out a structured pipeline of Precinct Structure Plans commencing from 2025/26, providing the forward visibility that front-end acquisition strategies depend on.
In Queensland, the Planning Amendment Regulation 2025 (Qld) introduced a dedicated build-to-rent land use definition - a small change with outsized significance for certainty in the BTR pipeline, alongside extended streamlined pathways for rooming and workforce accommodation. This reform was a significant step by the Queensland Government to expand housing options and providing greater certainty for developers.
What clients should be thinking about: greenfield acquisition structures should be stress-tested against a higher-for-longer rate environment, with option and staged-completion structures, infrastructure funding obligations and rezoning-contingent mechanisms drafted to preserve flexibility.
The new fast-track pathways across the east coast reward developers who arrive with well-prepared, compliant proposals - speed through the HDA or Targeted Assessment Pathway is earned at the front end.
With critical enabling infrastructure now becoming a genuine bottleneck for large developments, works-in-kind arrangements, infrastructure agreements and utility connection strategy deserve significant attention and planning.
Commercial and Industrial Leasing
FY2025/26 was the year leasing leverage genuinely shiftedbut in different directions depending on where you sat.
Industrial and logistics entered a new phase of the cycle. After years of historically tight conditions, national vacancy continued to rise through 2025 as a wave of speculative completions met more cautious occupier decision-making. Sydney vacancy reached its highest level in a decade by the end of 2025 with incentives levels also rising reached, reshaping effective rents even as face rents held.
Demand from data centres, cold storage, e-commerce and third-party logistics remained structural rather than cyclical, and vacancy is expected to stabilise through 2026 as the supply pipeline moderates.
In the office market, the recovery consolidated and the flight to quality continues. Our clients have seen elevated fitout costs driving pronounced preference for fitted and adaptable space, higher renewal activity, and harder negotiation over make-good, incentives structured as fitout contributions, and ownership of fitout at expiry.
What clients should be thinking about: for industrial occupiers, this is the best negotiating window in years – but it is precinct-specific and may be brief; incentive structures, expansion options and assignment flexibility should be priorities. For landlords, covenant strength, pre-commitment strategy and incentive clawback on early termination warrant careful drafting.
Across both asset classes, leases are becoming infrastructure documents: power availability and augmentation rights, ESG and emissions data-sharing obligations, and embedded network arrangements are now genuine points of value, and of dispute, in sophisticated transactions.
Capital Transactions
Capital markets delivered the most interesting story of the year - a powerful recovery that ran headlong into a monetary policy reversal.
The 2025 calendar year saw conviction return. Three RBA cuts compressed debt costs and transaction volumes built throughout 2025 – noting that the current rate volatility and uncertainty regarding the middle east conflict has somewhat reversed this trend over the first half of 2026.
Offshore capital has also been returning to Australia with foreign investment in Australian commercial real estate reaching approximately $46.3 billion by March 2026 for FY25/26 - with Singaporean, North American and UAE investors particularly active.
Improved FIRB processing times - with median approvals of around 36 days (as at 31 March 2026) - with 48% of applications being approved in less than 30 days has removed a long-standing source of deal delay, although the broader foreign investment compliance environment has tightened.
The RBA’s hikes in February, March and May 2026 returning the cash rate to 4.35% reintroduced uncertainty into pricing just as conviction had returned. Our experience in the final quarter of the financial year was not a freeze on transactions but rather a slowdown with clients reassessing their risk profile and putting renewed scrutiny on their debt terms, hedging and refinancing risk.
What clients should be thinking about: In a market where the cost of capital is volatile, returns are increasingly engineered through transaction architecture – staged settlements, vendor and mezzanine finance and platform-level transactions rather than single-asset trades.
Tax and regulatory settings should be addressed at term-sheet stage, not at documentation. And counterparties’ funding certainty deserves the same diligence as the asset itself.
Renewable Energy Projects
The energy transition is now one of the largest real estate stories in the country, and FY2025/26 was a watershed year.
In July 2025 the Commonwealth expanded the Capacity Investment Scheme (CIS) by 8 GW to a 40 GW target, lifting the renewable generation component to 26 GW and clean dispatchable capacity to 14 GW.The most recently announced results of Tender 7 under the CIS confirmed 19 renewable energy projects had been selected as part of Tender 7 delivering over 7.8 gigawatts (GW) of renewable energy with over 2 gigawatts (GW) of storage to the grid.
AEMO’s draft 2026 Integrated System Plan confirmed the scale of what is coming: renewables already supply more than 40% of the National Electricity Market, with coal retirements and electrification driving an enormous build-out of generation, storage and transmission over the decade ahead.
For property lawyers and their clients, the centre of gravity in these projects sits firmly in land. Battery energy storage systems were the standout asset class of the year and are competing with logistics and data centre users for industrial-zoned, network-adjacent land, pushing values and complicating acquisition strategy.
Landholder agreements for wind, solar and transmission have become genuinely sophisticated instruments, with rising market standards on compensation, decommissioning security and agricultural coexistence. Community benefit arrangements and First Nations participation are no longer optional extras: they are weighted assessment criteria in CIS tenders and increasingly embedded in state approval frameworks, including the new NSW Renewable Energy Planning Framework introduced as part of the NSW reforms.
What clients should be thinking about: site control is the scarce commodity. Proponents should secure optionality early through well-structured option and licence arrangements, with careful attention to grid connection rights, easement strategy for transmission, native title and cultural heritage processes, and the interaction between project tenure and underlying agricultural uses being more important than ever.
Landholders, for their part, are better advised than ever and developers should price professional, balanced agreements into their programs rather than treating them as an afterthought.
AI and the Future of Legal Services
No review of FY2025/26 would be complete without addressing the technology reshaping how legal services are delivered.
This was the year generative AI in Australian legal practice moved decisively from pilot to production, and the year its limits were made equally clear.
Adoption is at an all-time high, and the regulatory architecture is maturing alongside it.
The Commonwealth’s National AI Plan, released in December 2025, confirmed Australia will regulate AI through existing laws and sector regulators for now, supported by a new AI Safety Institute. At the same time, a series of well-publicised Court decisions involving fabricated AI-generated citations served as a reminder of what happens when output is not verified by people who know what they are looking at.
Our own experience mirrors the national picture.
We are using AI tools to great effect accelerating due diligence and lease reviews, interrogating large data rooms, and freeing our lawyers to spend more time on the judgment-intensive work clients actually value.
But the lesson of FY2025/26 is clear – while AI raises the ceiling on what skilled advisers can deliver; it does not lower the bar for the skill required.
The need to synthesise and augment AI outputs and exercising sound legal and commercial judgment about what to do next – has never been more valuable. Experienced legal advisers who harness these tools and provide true insights above mass produced “AI work slop” are becoming more valuable to clients, not less.
Looking Ahead: Key Considerations for FY2026/27
Heading into the new financial year, we see five priorities for our clients:
- Plan for rate volatility, not a rate view. The past twelve months punished anyone anchored to a single forecast. Build flexibility into acquisition structures, debt terms and feasibility models, and treat refinancing strategy as transaction-critical.
- Convert planning reform into pipeline. The NSW and Victorian reforms, the Housing Delivery Authority the Commonwealth’s Homes for Australia: A National Plan reward early movers with well-prepared proposals. The competitive advantage now lies in approval strategy as much as site selection.
- Use this leasing window deliberately. Industrial tenants currently hold rare negotiating power, with incentives rising over the last year, but that window may be closing as supply is expected to tighten through 2027. Office occupiers face the opposite dynamic with a shrinking construction pipeline pushing prime rents higher. In both markets, the cost of waiting is real. The time to act is now.
- Treat energy and land as a single strategy. Whether you are a renewables proponent securing site control, a landholder negotiating coexistence, or an industrial developer competing with batteries and data centres for powered land, energy is now a core real estate consideration.
- Demand more from your advisers. Not all advice is equal and in today's market, the gap is widening. Firms racing to replace judgement with AI tools are already producing generic, unreliable outcomes. The cheapest adviser is rarely the right one. Demand senior expertise backed by genuine data capability. That combination doesn't cost more, poor advice does.
It has been a privilege to work alongside our clients through a demanding and fascinating year.
If any of these themes are relevant to your business, we would welcome the conversation.
Duncan Webber
Partner
M: +61 401 649 553
Thomas Zilm
Partner
M: +61 455 858 685
https://www.moray.com.au/insights-events/media-release/australian-real-estate-year-in-review/