The Rise of an Investment Prodigy: Insights from Scott O’Neill on the Future of Property Investment

In the world of property investment, few stories are as compelling as that of Scott O’Neill, the director of the Rethink Group. With a remarkable journey that transformed an initial investment of $60,000 into a staggering $153 million property and business empire, O’Neill has become a beacon of success and insight for aspiring investors. As we look ahead to 2025, O’Neill has shared his predictions on which properties are likely to outperform, as well as critical warnings about certain asset classes that investors should avoid.

The Commercial Property Boom

O’Neill believes that commercial property will be a strong performer in 2025, primarily due to the current economic climate characterized by elevated interest rates. These conditions are prompting more buyers to seek out higher-yielding properties, making commercial real estate an attractive option. “As investors look for ways to maximize returns, commercial properties are becoming increasingly appealing,” he explains.

However, O’Neill emphasizes that not all commercial properties are created equal. He points out that while prime office spaces in central business districts (CBDs) have stabilized in pricing, older office buildings are facing significant challenges. “Older offices have been poor investments since the Covid recovery,” he notes, highlighting that these properties have seen value declines of up to 30% in some cases.

The Risks of Older Office Spaces

The pandemic has fundamentally altered the landscape of office real estate. Many companies have adopted hybrid work models, leading to reduced demand for older office spaces that lack modern amenities. O’Neill states, “Thirty-year-old buildings without premium fit-outs are almost redundant,” and cites vacancy rates nearing 30% in cities like Melbourne and Parramatta. This trend underscores the importance of investing in properties that meet the evolving needs of tenants.

O’Neill warns that the “flight to quality” trend is benefiting prime office assets while placing substantial pressure on secondary office spaces. As a result, older CBD office buildings are likely to continue facing challenges in attracting buyers and securing tenants in the foreseeable future.

The Decline of Petrol Stations

Another asset class that O’Neill advises investors to approach with caution is petrol stations. He describes them as a risky buy, noting that many major corporations and private investors are eager to exit this asset class. The rise of electric vehicles and shifting investor sentiment regarding fossil fuels are contributing factors to this trend. “This is not an asset class I would confidently rely on for future returns,” he cautions.

Moreover, O’Neill highlights that many petrol stations are being offered as development sites, indicating a shift in how these properties are perceived in the market. This trend reflects broader changes in consumer behavior and the increasing importance of sustainability in investment decisions.

Properties to Embrace in 2025

Despite the challenges in certain sectors, O’Neill is optimistic about several property types that are poised for growth in 2025. He identifies non-discretionary retail sites—those that sell essential services—as potential outperformers. “With Australia’s resilient population growth and demand for essential services, this sector is poised for stable performance,” he explains. Non-discretionary retail is expected to be a safe haven for investors seeking low-risk opportunities.

Additionally, O’Neill points to industrial properties, particularly those in the $2 million to $5 million range, as another safe bet. These properties typically offer higher rental yields than their pricier counterparts and are expected to see increased demand as superannuation funds look to diversify their portfolios.

The Stability of Medical and Childcare Facilities

O’Neill also highlights medical centers and childcare facilities as attractive investment options. These properties are often considered “recession-proof” due to their long lease terms and growing demand. “Leases for these asset types often extend beyond 15 years, providing a strong sense of stability,” he notes. For conservative investors, these properties offer reassurance and reliability within the commercial asset sector.

Conclusion: Navigating the Future of Property Investment

As the property market continues to evolve, Scott O’Neill’s insights provide valuable guidance for investors looking to navigate the complexities of real estate. By focusing on high-quality commercial properties, non-discretionary retail, and recession-resistant assets like medical centers and childcare facilities, investors can position themselves for success in 2025 and beyond.

While the allure of quick returns can be tempting, O’Neill’s cautionary advice about older office spaces and petrol stations serves as a reminder that due diligence and strategic planning are essential for long-term success in property investment. As the landscape shifts, those who adapt and make informed decisions will be best positioned to thrive in the ever-changing world of real estate.