Australia’s commercial real estate market is gearing up for a dynamic year. We asked top industry experts to share their take on the key trends that will shape the sector in the coming months.
From a surge in build-to-rent developments to a growing appetite for alternative assets, here are their predictions for 2025.
Investor confidence reignited
After months of cautious recalibration, investors are dusting off their portfolios, ready to seize fresh opportunities on the back of stabilising interest rates.
In Victoria, Stonebridge Property Group Director Andrew Milligan said investors were already factoring in potential cuts.
“We anticipate developer and investor sentiment to strengthen into 2025 and beyond,” he said.
In NSW, Colliers Office Capital Markets & Investment Services Managing Director Matthew Meynell is noticing a similar shift.
“Investors who’ve been patient during this recalibration phase will likely find themselves well-positioned to capitalise on assets as the market begins to stabilise and, eventually, grow again,” he said.
Meanwhile, the outlook is equally optimistic in Western Australia. “Western Australian population growth continues to be strong,” said Ian Mickle, Head of Agency for Cygnet West.
“With low unemployment and a strong economy, we should enjoy good trading conditions for many years to come.”
Commercial assets in the spotlight
Demand for retail, office, and industrial properties is holding strong, with limited supply boosting yields.
“Retail development sites have good buyer depth, driven by a lack of recent retail development activity in high-quality locations,” said Mr Milligan.
“Demand for retail will continue to remain robust, as the lack of supply further entrenches pricing increases.”
In NSW, Mr Meynell points to early signs of recovery in the office sector. “The team at Colliers have observed a notable shift in the market with employees returning to the office,” he said.
“Overall, while challenges remain, these positive indicators point to a market that is steadily adapting and finding new areas of strength.”
Western Australia’s industrial market remains tight.
“Secondary rents are rising behind prime rents in the absence of other options,” said Greg O’Meara from Cygnet West. “With such low vacancy, growth is likely to continue.”
Housing pressures mount
Australia’s housing woes continue to dominate headlines, with skyrocketing demand and tight supply squeezing the market.
Restrictive zoning laws and lengthy planning processes are compounding the issue in NSW.
“Developers are often stuck navigating lengthy approvals, which makes it difficult to deliver housing at the scale and speed required,” said Mr Meynell.
In Queensland, construction costs and affordability challenges are stalling progress.
“We need to keep looking at ways that housing can be delivered into the market in a long-term sustainable fashion,” said Paul Noonan, Managing Director at JLL Australia.
Western Australia is also under pressure.
“New product is expensive to build and whilst construction costs may stabilise, they won’t reduce,” said Cygnet West Director of Residential Projects Greg Billings.
In Victoria, housing supply is struggling to meet the demands of population growth.
“Boosting supply has been a major component of the Victorian Government’s platform, with the announcement of the 50 new major activity centres flagged, as well as a rollout programme for further greenfield sites. Stamp duty concessions have also been announced,” Mr Milligan said.
“Certainty these initiatives, as well as an improved and efficient planning process, will be critical to opening up additional affordable supply across all markets.”
The build-to-rent boom
Australia’s build-to-rent (BTR) sector is primed for expansion, attracting strong domestic and international investment.
Victoria leads the way, with 4,500 apartments slated for completion this year.
“Despite capital constraints impacting participants in the sector, we see strong demand in the BTR sector throughout 2025,” said Mr Milligan. “Rental rates remain high, and uptake in existing assets is reportedly strong, with lack of supply a major driver.”
In NSW, investment momentum and a shift towards affordability is fuelling growth.
“Moving forward, we expect to see a broader emphasis on integrating affordable housing into BTR developments,” said Mr Meynell.
However, challenges remain in Queensland, where capital constraints and red tape slow progress.
“I believe that it is a sector that will continue to build and grow; however, further government support is required in order to speed up the delivery of these assets,” said Mr Noonan.
Institutional assets gain traction
As demographics and lifestyles evolve, institutional assets are cementing their reputation as a smart investment.
“Senior housing and healthcare assets, driven by Australia’s ageing population and the consistent demand for medical services, continue to offer reliable, low-risk returns,” said Mr Meynell.
In Victoria, childcare and self-storage remain in high demand.
“Hospitality assets also continue to trade well to private capital, with a strong tenant and long-term leases a major draw card for investors,” said Mr Milligan.
Mr Noonan sees similar strength in Queensland’s alternatives sector.
“The best way for private investors to get exposure to alternatives is via listed or wholesale groups specialising in this asset class,” said Mr Noonan.
