Our diversity and ability to pivot is our fundamental strength in all economic and market cycles -Gregory Preston AM
Given the global trade policy stance on tariffs of the USA government and its imposition of then significant trade tariffs in the lead up to Trump’s 2 April 2025 Liberation Day, particularly on China, a period of global trade economic volatility ensued.
As China is one of Australian major trading partners the implication of sudden significant increases in tariffs on China and possibly Australia created notable uncertainty globally, not to mention in Australia in the third quarter.
This, coupled with the lead up to the Australian Federal Election on Saturday 3 May 2025 saw a slowing of economic activity and unprecedented volatility in equity and bond markets.
The recent storm has somewhat blown over at the time of drafting this note (on 14 May 2025) as the Albanese Government had a resounding win in the election. Also, on 12 May 2025 the USA and Chinese Government have announced temporary reductions in reciprocal tariffs for a 90-day period which has been reported as a trade war break through.
Preston Rowe Paterson as a valuation, advisory and property management business has always, since inception in 1988, maintained a diversified service offering to cope with, and in fact strive in, times of economic and market volatility.
Our service offering is diversified to the extent that it is not reliant on any one type of client or reason for the service. For example, only mortgage valuations for banks. This work is of course important to us, but we also have a long established track record and experience in providing valuation and advisory work for other reasons, for other client types and, importantly, for all real estate asset classes, plant machinery and equipment and infrastructure.
This diversification allows us to pivot and target our service offering in different economic and real estate market cycles to our advantage. In fact, our business offering is ideally suited to periods of economic instability. Valuation and advisory work is required for different reasons in different economic cycles.
Our diversity and ability to pivot is our fundamental strength in all economic and market cycles.
The foundation stones of our business are:
Tracking the main economic and real estate market indicators is a key factor in our ability to pivot with changes in economic and market circumstances to our advantage.
Monitoring long-term and short term bond markets and general interest rate markets is front of mind in our forward strategic planning, as is the cost of capital (Weighted Average Cost of Capital – WACC) for market participants and stakeholders.
The cost of capital is fundamental to our understanding and forecasting things like capitalisation and discount rates for single and multi-tenant investment real estate; and the cost of debt and equity in development real estate.
Our March 2025 economic snapshot is scanned below as is our economic summary table:-
