Tackling affordability requires bold thinking: Charter Hall CEO David Harrison

The property major’s boss David Harrison says state governments also have a big role to play in solving the housing crisis.

Charter Hall chief executive David Harrison. Picture: Chris Pavlich

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

There’s a lot of opportunities heading into 2025, but equally there are major sectors in the Australian economy that remain under pressure, and that’s being reflected in the slowing economic growth and negative GDP per capita.

Property is one of those sectors, where we believe we’ve hit the trough in asset pricing at December 2024 and will see a return of growing valuations in 2025. New building supply is a significant challenge and will limit space creation versus population growth, which will be a tailwind for existing asset rent growth and values.

The easing cycle forecast for 2025 will support a recovery, and if there is sustained progress with cooling inflation, we’re likely to see the timing of rate cuts to be in line with expectations or even may be quicker and sharper than consensus as cost-of-living crunches household disposable income.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

We believe markets are in a strong position for growth. In property, we see significant opportunity in 2025 to deploy capital across our core sectors, securing high quality assets at trough pricing. Further, if equities continue to rise in value, global investors will be increasingly underweight in property and we are well-positioned to capture that growth, with Australia continuing to be viewed as a safe haven for global capital.

The biggest headwind is the ever-increasing tax and duty rates being applied by most state governments. State government revenue actually falls in absolute terms as tax rates rise as it virtually stops dead capital investment and transaction markets – this will become most evident for States who are overtaxing property and distorting capital markets by deterring foreign investment. We need densification in all sectors, not just residential, if we are to arrest the affordability crisis facing many Australians.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

There is a growing urgency for tax reform at all levels of government. Global economies are progressing toward reform and the costs of inaction in Australia are growing. The disparate economic outcomes across Australian states is evidence of the impact of ineffective and ineffective tax regimes. It can’t be underestimated the important role that global capital plays in our economy and the growth of our cities, and in order to remain competitive on a global scale, we need policies that encourage inbound investment into Australia. And then with that also comes other critical building blocks to a strong economy such as population growth, skilled labour, consumer spending, education and more. Without foreign capital domestic super funds will invest offshore where more balanced tax regimes create more harmonious capital markets. Decades ago, we used to say Australia rides the back of the sheep we produce. Now Australia can only prosper with capital investment from all jurisdictions and productivity gains that’s drive an improving standard of living, which is going in the wrong direction presently.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

A second Trump presidency increases the prospect of more expansionary policy and some of the gains across the equity markets are on the expectations that upcoming policies will boost after-tax earnings. If equity markets continue to increase, it creates further investment capacity for institutional investors to invest in property – the denominator effect – many of which are already underweight in property following the most recent cycle downturn. Equally, if there is volatility in response to the wider distribution of policy outcomes, we expect investors will gravitate toward the safety and risk-adjusted forward returns Australia’s high quality real estate offers.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Flexibility is about a lot more than just “work from home” and we work on a broader definition that allows us to meet the needs of our people in a variety of ways. This includes location, schedule, reduced time, and role design.

We recognise that different people with different circumstances have varying flexibility needs. That’s why our approach to working flexibly is predicated on a “three-way win”. It means that while our primary place of work is the office, managers work with each team member to find the right balance between the individual needs, the team’s needs and our needs as a business. Our approach has been in place for many years, well before Covid, and we don’t anticipate any changes to our approach into 2025.

However I am I strong believer that greater productivity and training your people comes from working closely together face to face – not on screens.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

We’re in the developmental stage, using it business-wide in some cases, but remain responsibly curious. We’re realising some early efficiency benefits by harnessing it’s opportunities while managing the risks. For example, we’ve rolled out Microsoft Copilot to our people to help them unlock efficiencies in their roles while mitigating the security risks of other generative AI tools. We’re also looking at more targeted, bespoke uses for AI, with a focus on evolving our way of working to automate tasks where possible, enhance our analysis and insights-creation, and enable our people to focus on more value-add work.