The election, economic factors shaping commercial property

Commercial property investors are closely monitoring the political landscape in the lead-up to the 3 May federal election.

While housing affordability and the residential supply crises dominate headlines, neither the Labor Party nor Liberal Coalition are proposing changes that would dramatically shift the commercial property landscape.

Subtle differences, however, between their respective policy platforms could influence market confidence, development pipelines, and long-term trends across certain asset classes.

If Labor wins

A continued Labor Government under Anthony Albanese is expected to pursue an expansion of public spending on housing, health, and infrastructure.

This focus could indirectly benefit the commercial property market, particularly the industrial and logistics sectors, which tend to thrive alongside major public infrastructure investment and urban expansion.

Labor’s stronger stance on climate policy and sustainability, commercial landlords and developers could also see a tightening of energy standards and ESG-related compliance, raising operating and retrofitting costs, especially for older properties.

There’s also the potential for broader tax and regulatory reform under Labor, which, while still unclear in detail, may introduce new compliance considerations for investors.

If Liberals win

A return to power for the Liberal Coalition, led by Peter Dutton, could possibly signal a more market-led, business-friendly approach.

While commercial property isn’t directly addressed in the Coalition’s key talking points, their stance on reducing red tape and maintaining tax stability is likely to appeal to private investors and developers.

In the property sector, this may translate into fewer regulatory changes, minimal ESG compliance pressure, and a more predictable environment for planning and development approvals.

A focus on supporting small and medium-sized enterprises could also drive incremental demand for suburban office spaces, coworking hubs, and light industrial properties, especially in growth corridors.

Subtle policy shifts matter

Overall, the 2025 election is not expected to cause major disruption in the commercial property space, but the nuances do matter.

Investors aligned with industrial, logistics and infrastructure-adjacent assets may find more upside under Labor’s spending agenda. Those prioritising regulatory predictability and tax stability may lean toward a Coalition-led government for a more business-as-usual environment.

Global trade tensions

Beyond domestic policies, international developments are influencing the Australian commercial property market.

US President Donald Trump’s aggressive and constantly shifting trade policies, including tariffs on Chinese imports, have introduced economic uncertainty.

These tariffs may lead to deflationary pressures by redirecting goods to alternative markets but they also pose risks, such as increased market volatility and potential disruptions to global supply chains.

For Australian investors, I anticipate the most significant impact of these trade tensions will be a downward shift in interest rates.

At the beginning of April, markets were pricing in just two rate cuts for 2025. That number has now increased to four or five expected cuts—an important change that is likely to place upward pressure on property prices.

 This is particularly relevant for commercial property, which historically responds more directly to interest rate movements.

What should investors watch?

Investors should monitor post-election budget announcements, particularly infrastructure spending or tax treatment of commercial assets.

Changes to energy and sustainability standards, especially if Labor strengthens building compliance frameworks, and policy clarity around planning reform are also key indicators to watch.

In a climate of high interest rates and economic caution, commercial investors aren’t necessarily hoping for big promises, just stable ground to plan their next move.