Real Estate Operating Companies in Australia: 2025 Trends & Insights

Australia’s real estate landscape has always been dynamic, but the rise of Real Estate Operating Companies (REOCs) is adding a new dimension to the sector. While property trusts and REITs have long dominated headlines, REOCs are increasingly capturing the attention of investors, developers, and policymakers. But what exactly is a REOC, and why are they making waves in 2025?

What is a Real Estate Operating Company (REOC)?

Unlike traditional Real Estate Investment Trusts (REITs), which focus primarily on owning and managing income-generating properties, REOCs are actively engaged in both the development and operation of real estate assets. A REOC is a company whose primary business involves acquiring, developing, managing, and sometimes even selling real estate—often across multiple property types and regions.

• Active management: REOCs frequently buy, renovate, and sell properties, seeking value creation through operational improvements.

• Broader flexibility: They are not bound by the same tax and distribution requirements as REITs, giving them more freedom in how they deploy capital.

• Diversified portfolios: Many REOCs operate in multiple real estate sectors, from commercial and residential to logistics and hospitality.

REOCs vs. REITs: The 2025 Perspective

The distinction between REOCs and REITs has become even more pronounced in 2025, as new regulatory updates and market trends shape the property sector:

• Tax treatment: REITs in Australia continue to benefit from the Managed Investment Trust (MIT) regime, but must pay out a majority of their profits as dividends. In contrast, REOCs are taxed as standard companies, offering them more flexibility in profit retention and reinvestment.

• Growth strategies: While REITs typically focus on stable, income-generating assets, REOCs can take on more risk and pursue higher-return development projects or value-add opportunities.

• Recent policy changes: The 2025 Federal Budget included new incentives for sustainable property development, which REOCs are leveraging to pioneer green and mixed-use projects, especially in metropolitan growth corridors.

For example, Lendlease and Mirvac—two of Australia’s largest listed REOCs—have announced ambitious carbon-neutral developments in response to both investor demand and government sustainability targets.

How REOCs Are Innovating in 2025

This year, several trends are driving REOC innovation in Australia:

• Embracing PropTech: From AI-powered property management to smart building systems, REOCs are investing heavily in technology to boost efficiency and enhance tenant experiences.

• Flexible asset strategies: Many REOCs are shifting focus to logistics and data centres, capitalising on the e-commerce boom and rising digital infrastructure needs.

• Affordable housing initiatives: In response to government pressure and social demand, some REOCs are partnering with state governments to deliver build-to-rent and affordable housing projects. The recent expansion of the National Housing Accord and low-interest financing for green developments are directly benefiting these companies.

• International expansion: Australian REOCs are increasingly active in overseas markets, particularly Southeast Asia and the UK, diversifying revenue streams and hedging against local market volatility.

One standout example is Stockland’s 2025 launch of a mixed-use precinct in Melbourne’s north, which combines retail, residential, and flexible workspaces—all managed under a single operating company model.

What Should Investors and Stakeholders Watch?

The evolving REOC model presents both opportunities and challenges for investors, regulators, and tenants. Here’s what to keep an eye on:

• Performance volatility: Because REOCs are exposed to development and operational risks, their returns can be less predictable than those of traditional REITs.

• Transparency and governance: With increased operational complexity, strong corporate governance and transparent reporting are more critical than ever—something the ASX and ASIC flagged in their 2025 market guidance updates.

• Impact of interest rates: As the RBA continues its cautious approach to interest rates in 2025, REOCs with higher leverage or aggressive expansion plans may face increased funding costs.

For those considering investing in or partnering with a REOC, understanding the company’s strategy, market focus, and risk profile is essential.