Australia Commercial Real Estate Market Report and Forecast 2024-2032

Australia Commercial Real Estate Market Outlook

The Australia commercial real estate market size reached USD 33.88 billion in 2023. The market is expected to grow at a CAGR of 7.9% between 2024 and 2032, reaching almost USD 67.61 billion by 2032.

Key Takeaways:

• As reported by Commercial Real Estate, the value of investment-grade industrial property in Australia is projected to surpass that of office property for the first time by 2026. This shift is attributed to the rising values of logistics real estate, driven by the expansion of e-commerce and the construction of larger facilities to accommodate this growth.

• According to the 2023 Institutional Real Estate Allocations Monitor, global institutional investors are expected to maintain target allocations to real estate at 10.8% in 2024.

• As per industry reports, Asia Pacific-based investors, with the lowest real estate allocation among major regions, anticipate increasing their target allocation to 10.0%, while EMEA-based investors, with the highest allocation, forecast a slight reduction to 11.3%.

In 2020, the Australia commercial real estate market underwent significant change due to the COVID-19 pandemic, with flexible work arrangements and increased e-commerce altering market dynamics. Despite disruptions, opportunities emerged for investors, landlords, and occupiers. In 2022, commercial real estate entered a new era in Australia, with low-interest rates, government stimulus, and a rebounding population driving market optimism. Investors benefitted from favourable conditions, including cheap debt and structural shifts, while urbanisation and population growth remained key market drivers.

The sector witnessed notable trends such as improved accessibility, shared office spaces, and digital connectivity. However, challenges loomed, particularly with climate concerns prompting the need for innovation to sustain growth. Even before the pandemic, a decline in commercial building activity was anticipated, yet prime office spaces in Melbourne and Sydney maintained high demand and limited vacancy rates.

The rise of flexible workspaces gained traction, offering companies temporary leasing options amid uncertain market conditions. Despite fluctuations, office real estate investment remained steady, partly due to the pandemic’s impact. Meanwhile, industrial and logistics sales surged, led by ESR’s record-breaking acquisition of the Milestone logistics portfolio.

Retail investment activity rebounded despite ongoing challenges faced by malls, driven by a resurgence in retail transactions. Foreign investment in the commercial real estate market in Australia varied, with the USA and Germany showing confidence in the market, while others reduced their commitments.

Regional transaction activities varied, with New South Wales dominating commercial real estate transactions, while Western Australia witnessed a smaller share. A rebound in overseas migration and tourism supported Australia's services sector, prompting a GDP growth forecast upgrade by the IMF.

Institutional investors anticipate steady real estate allocations globally, with Asia Pacific-based investors expected to increase their target allocation. Despite challenges, the Australian property market remains resilient, poised for further growth amidst evolving market dynamics and investor confidence.

Market Segmentation

Australia Commercial Real Estate Market Report and Forecast 2024-2032 offers a detailed analysis of the market based on the following segments:

Market Breakup by Type

• Industrial and Logistics

• Offices

• Multi-family

• Hospitality

• Retail

Market Breakup by Region

• New South Wales

• Victoria

• Queensland

• Western Australia

• Australian Capital Territory

• Others

Competitive Landscape

Key players in the commercial real estate in Australia develop and provide properties and services to support the end-users.

• Meriton Group

• Frasers Property Australia Pty Limited

• Stockland Corporation Limited

• Mirvac Limited

• ABN Group

• Knight Frank Australia Pty Ltd.

• Colliers International

• Gorman Allard Shelton Pty Ltd.

• Others

Key Highlights of the Report