Standing before advisers at the INZ: Investment Leaders Forum in Queenstown, Barwon Investment Partners’ Tom Patrick struck a hopeful tone. The partner and head of healthcare property at the Sydney-based alternatives manager argued that we are at the start of the new property cycle; and accordingly, demand for core commercial property has returned.
Years of volatility, triggered first by COVID-19 and then by macroeconomic shocks, had pushed investors away from equity real estate and into defensive private credit. But as interest rates peak and stabilise, Patrick said, the spread between real estate yields and base rates is once again becoming attractive. “The pendulum is swinging,” he said. “People will still allocate to real estate credit, but increasingly more to ‘core’-style real estate.”
This perspective is backed by investor data. According to CBRE’s Investor Intentions Survey, preference for core property strategies across the APAC region has doubled from 2024 to 2025, overtaking opportunistic and distressed strategies, which dominated during the inflation spike. For Patrick, the trend is clear. “We’re seeing renewed confidence in core property,” he said.
Transaction volumes support this thesis. After a two-year slump during which buyers and sellers were separated by a wide valuation gap, volumes have begun to climb again in 2025. “That narrowing of the buy-sell spread shows us that confidence is returning, and that assets are now being correctly priced,” Patrick explained.
Timing, he said, is critical. Core property returns, unlike equity markets, tend to unfold gradually, providing a long entry runway. Distressed and opportunistic real estate plays, by contrast, are compressed and highly sensitive to market conditions. “Commercial property returns go up the stairs and down the elevator,” Patrick noted. “That’s why your entry point into core matters so much.”
The big shift, however, is not just a reversion to core, it’s also about where in core property the capital is going. “Institutional investors globally, and increasingly here in Australia, are looking at alternative core sectors,” Patrick said. These include healthcare, data centres, life sciences, and build-to-rent housing. In the US, allocations to these segments have steadily risen over the last decade, and Asia-Pacific (APAC) investors are now following suit.
Barwon Investment Partners manages $3.7 billion invested across healthcare property, real estate credit, listed private equity and specialist disability accommodation. Healthcare is Patrick’s focus: he and his team invest across a wide spectrum, from diagnostic imaging clinics and medical centres to private hospitals and cancer care facilities. In Australia, healthcare represents more than 11 per cent of GDP and is second only to mining in national expenditure. “It’s a non-discretionary sector with significant government funding,” Patrick said. “That creates a compelling case for long-term investment.”
Patrick pointed to the performance of healthcare real estate over the last 15 years as evidence of its resilience. According to MSCI data, it has been the second-best performing core property segment in the Australian market. With long leases, high occupancy and low incentives, it offers inflation-linked income with relatively low volatility. “We think the vintage for this sector is very good,” he said.
Importantly, healthcare is still under-invested. Patrick said that while the sector has matured significantly in Australia over the past decade, allocations remain low compared to markets like the US and UK. “This part of the market still has a long way to run,” he noted. “Access can be difficult, but that creates opportunity for early investors.”
Alternative sectors also help investors diversify away from the traditional office, industrial and retail mix that tends to be highly correlated with broader economic cycles. “These alternative segments, like healthcare, are less tied to macroeconomic outcomes,” Patrick explained. “They offer a way to build a more balanced portfolio with exposure to structural tailwinds.”
The data supports this. In 2025, APAC-based investors have doubled their allocations to alternative property strategies, with industrial and office allocations falling in tandem. Retail, after years of underperformance, is also seeing renewed interest, albeit from a low base.
In his closing remarks, Patrick urged advisers to revisit their real estate exposures, not just in terms of structure, but also in terms of strategy and access. “When you start to think about core-style property again, we believe this vintage is going to be particularly strong,” he said. “Institutional capital is shifting back in that direction.”
His message was both cautionary and optimistic. Cautionary in the sense that distressed and opportunistic strategies will become harder to execute as pricing rebounds; optimistic because core property, often overlooked during the rate-hike era, now offers a clear runway for long-term growth and stable income. For financial advisers, the takeaways are practical. Understand the cycle. Re-evaluate the balance between debt and equity real estate. And explore the alternatives within core that offer genuine diversification and access to long-term themes. As Patrick concluded, “We think we’re early in this next phase. And for investors who can move now, the runway looks promising.”