With new housing starts at decade lows, surging construction costs and builders under pressure, the impact of rate increases and inflationary pressures has created distressed and attractive risk-adjusted opportunities throughout the residential sector – opportunities which have been taken up by the Dexus Real Estate Partnership (DREP) Series.
The cash rate in Australia has increased thirteen times since the start of this cycle, taking it from 0.10% to 4.35%. This period delivered the most rapid increase in Australian interest rates on record. Readjustments across the economy, many of them painful, were inevitable.
We are at a cyclical inflection point. Intensifying capital pressures are forcing the hands of many real asset owners and creditors, including in the residential sector. Their choices are unenviable: pay more for debt or accept less when selling their assets. One way or another, the continuation of elevated borrowing costs and the need for liquidity is forcing action.
For those with access to capital and operational capability, we have entered a period of significant potential and Dexus is well positioned to find and capitalise on these investments amid the disruption.
Dexus’s first opportunity fund, Dexus Real Estate Partnership 1 (DREP1) launched in 2021 and raised equity of A$475 million. Leveraging the Dexus platform, and a trading track record spanning more than 10 years, we have secured 141 transactions to date across the spectrum of real estate investments. The Fund is on track to deliver the target net equity IRR of circa 15%2 .
With new housing starts at decade lows, surging construction costs and builders under pressure, the impact of rate increases and inflationary pressures has created distressed and attractive risk-adjusted opportunities throughout the residential sector – opportunities which have been taken up by the Dexus Real Estate Partnership (DREP) Series.
The cash rate in Australia has increased thirteen times since the start of this cycle, taking it from 0.10% to 4.35%. This period delivered the most rapid increase in Australian interest rates on record. Readjustments across the economy, many of them painful, were inevitable.
We are at a cyclical inflection point. Intensifying capital pressures are forcing the hands of many real asset owners and creditors, including in the residential sector. Their choices are unenviable: pay more for debt or accept less when selling their assets. One way or another, the continuation of elevated borrowing costs and the need for liquidity is forcing action.
