Australia’s commercial real estate market is emerging from a long reset, with large funds and institutions slowly returning after spending the past few years waiting for interest rates, inflation and asset values to settle. The pullback was especially visible in offices, retail centres and industrial assets, where many owners had to absorb steep valuation declines before buyers were willing to re-engage. Now, with pricing clearer and financing conditions steadier, capital is starting to move again across offices, shopping centres, logistics facilities and newer segments such as data centres and build to rent.
Preliminary data from a major global analytics firm shows commercial property deals in Australia rising about 8% this year to roughly $50.8 billion, helped by several transactions close to the $1 billion mark for prime assets such as flagship city office towers and major regional malls. Industry researchers describe this upswing as a sign that price discovery has largely played out, with yields now better aligned to higher funding costs and encouraging both domestic funds and international institutions to deploy more capital into income producing real estate. Retail and office assets appear to benefit the most from this shift, even though industrial volumes have eased slightly after a multi year boom and data centre totals look lower mainly because last year’s figures were inflated by a single record breaking buyout.
Looking across the market, the momentum in deal activity seems to point toward a turning point rather than a full blown boom, with investors focusing on assets where rental income looks resilient and valuation risk appears more manageable. Retail property stands out with transaction volumes up by around 40% on last year and back to their strongest levels since 2021, while offices are seeing improved liquidity after some properties lost roughly a quarter of their value during the downturn. Offshore investors play a significant role in this recovery, committing close to $10 billion under one leading broker’s estimates, with North American, Japanese and Singaporean institutions all actively targeting Australian offices, industrial sites and development projects as part of wider Asia Pacific strategies. If borrowing costs stabilise and leasing demand holds up, 2025 looks like it could be remembered as the year the commercial property cycle finally turned a corner, though much still depends on how the global economy and interest rates evolve.
