2248 GMT - For Australian property stocks, capitalization rates are now higher than they were before the Covid-19 pandemic. Citi thinks cap rates will soon peak, which is one reason why it's broadly bullish about the sector early in 2025. Commercial real estate is typically valued based on its cap rate, or the annual net income produced by a property divided by the purchase price. Like bond yields, rising cap rates indicate falling values, and vice versa. "As rental growth across sectors started to stabilize, coupled with stabilizing asset valuations, we believe cap rates are near their peak of this cap rate cycle," analyst Howard Penny says. He notes cap rates for neighborhood retail properties are now at pre-pandemic levels. (david.winning@wsj.com; @dwinningWSJ)
(END) Dow Jones Newswires
January 12, 2025 17:48 ET (22:48 GMT)
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