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Julia Forrest: Muted supply sets real estate up for growth
January 21, 2026
Residential and commercial real estate in Australia continues to be undersupplied, which makes this a sector to watch in 2026, according to JULIA FORREST, co-portfolio manager of Pendal’s Property Securities Fund.
- Construction costs hamper new property builds
- Retail and affordable residential favoured in 2026
- Find out more about the Pendal Property Securities Fund
The cost of construction spiked 40 per cent between 2019 and 2024 and that is a trend that continued throughout 2025.
“It’s uneconomic to build new assets. It’s very difficult to make a new development stack up,” says Forrest.
“So that puts the sector in a good light in terms of rental growth going forward, because you don’t have a big supply pipeline.”
With the anticipated shift from interest rate cuts to hikes this year coupled with the tight property supply pipeline, rental growth looks intact.
“Construction costs historically have never ever gone down. Labour costs are locked in at between 4 and 5 per cent growth, and materials, which are half of the cost, are probably going to go up with CPI,” explains Forrest.
“So construction costs won’t go backwards. If anything, they’re going to continue to rise.”
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Population growth and job security are also anticipated to be solid this year.
This is a positive for predicted earnings growth in 2026, which Forrest views as “pretty strong”.
“Prospectively, earnings growth is somewhere between 4 and 6 per cent in the next year, which is around the same as the All Industrials,” she says.
“Given that real estate is locked in through long-term leases, you don’t have the same risk in terms of that earnings growth profile.”
“So we are expecting a good return for 2026 – values have dropped, rental growth looks intact, and the supply pipeline continues to be very muted.”
Pendal’s REIT portfolio comprises established assets as well as development assets, including shopping centres, office, industrial, residential development, petrol stations, pubs and storage.
“In terms of our positioning, we like retail real estate. This includes convenience-based retail, such as discretionary malls, but we also like affordable residential or retirement properties,” says Forrest.
“Most listed Real Estate Investment Trusts have very high-quality assets, so if equity investors continue to ignore the sector, then you’ll have other investors that will buy it.”
About Julia Forrest and Pendal Property Securities Fund
Julia Forrest is a portfolio manager with Pendal’s Australian Equities team. Julia has managed Pendal’s property trust portfolios for more than a decade and has 25 years of experience in equities research and advisory, initial public offerings and capital raisings.
Pendal is an Australian investment management business focused on delivering superior investment returns for our clients through active management.
Pendal Property Securities Fund invests mainly in Australian listed property securities including listed property trusts, developers and infrastructure investments.
About Pendal Group
Pendal is an Australian investment management business focused on delivering superior investment returns for our clients through active management.
This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current at 21 January 2026. PFSL is the responsible entity and issuer of units in the Pendal Property Securities Fund (Fund) ARSN: 087 593 584. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com.
The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested.
This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date.
While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance.
Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com
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