As we approach the midway mark of 2025, the Australian commercial real estate sector is showing clear signs of revival.
Falling interest rates, surging infrastructure spending, and ongoing population growth are stabilising conditions and drawing capital back into the market.
We spoke with experts in Victoria, New South Wales, Queensland, and South Australia to uncover emerging trends and pinpoint the opportunities in the coming months.
Buyer Appetite Rekindled
Nationwide, buyer interest is recovering thanks to improved fundamentals.
Knight Frank's Head of Investment Sales in Victoria, Tom Ryan, said that population growth and price corrections are luring investors. “In some cases, commercial properties are transacting at significant discounts of up to 20% below peak valuations,” he said.
South Australia shows a similar appeal.
“South Australia’s commercial property market screens relatively attractive when yields are compared on a national basis,” CBRE Senior Managing Director SA & ACT Alistair Laycock said.
New South Wales remains “the engine room of Australia’s commercial property market,” according to X Commercial CEO Daniel O’Brien. “The main drivers are clear: infrastructure-led growth, rapid immigration, and a resilient metro economy,” he said.
Meanwhile, Queensland’s pace is being powered by demographics. “Queensland’s strong population growth, economic resilience, and long-term development outlook are reinforcing its appeal as a stable and promising investment environment,” Colliers Gold Coast Director in Charge Stephen King said.
Cuts Spark Comeback
Recent rate cuts have also reignited activity.
“Deals that were previously stalled due to interest rate sensitivity are starting to come back to life,” said Mr O’Brien.
In South Australia, improving financial conditions are driving early signs of stability and yield compression. “Further meaningful interest rate cuts are likely to lead to a pickup in investment volumes,” said Mr Laycock.
Mr Ryan said sentiment had lifted following a sluggish period marked by high debt costs in Victoria. “We are already beginning to see a shift in the debts, with LVRs and margins becoming more appealing and the overall cost of debt decreasing,” he said.
Meanwhile, lower borrowing costs are improving deal feasibility and encouraging capital deployment in Queensland.
“As financial conditions ease, we anticipate a gradual increase in transaction volumes and renewed interest in value-add and core-plus strategies,” Mr King said.
Public Money Unlocks Potential
Large-scale government infrastructure projects are creating new opportunities nationwide.
In Queensland, a $7 billion public spend ahead of the 2032 Olympics is opening new precincts. “Complementary government policies that support sustainable development and economic diversification are further strengthening confidence and positioning Queensland as a long-term investment hotspot,” Mr King said.
In New South Wales, infrastructure delivery is redirecting investment across metro and regional markets. “This is one of the most exciting stories in NSW right now,” Mr O’Brien said. “When governments commit billions to a region, private capital isn’t far behind.”
Victoria is also seeing a positive uplift from state-based projects. “From an office market perspective, there’s strong demand and growing investor interest around the new train stations,” said Mr Ryan.
South Australia is benefitting from major transport and defence upgrades. “The scale of the AUKUS defence project investment and forecasted demand is expected to lift investor appetite for South Australia’s commercial property market over the coming years,” Mr Laycock said.
Retail, Industrial Lead, Office Lags
Retail and industrial assets continue to dominate commercial transactions, with selective recovery underway in the office sector.
In Victoria, retail is outperforming for the first time in a decade. “Retail’s bounce back in popularity highlights Melbourne’s growing and resilient economy,” Mr Ryan said.
Queensland’s industrial space remains robust, fuelled by e-commerce expansion and supply chain shifts. “Retail and office assets are regaining momentum - especially well-located suburban retail centres and flexible office spaces,” Mr King said.
In New South Wales, industrial hotspots have emerged in South Sydney and the Inner West. “Office is also making a comeback - but only at the top end,” Mr O’Brien said. “The investors still circling retail are taking a very selective, yield-driven approach.”
Meanwhile, retail is leading transaction volumes in South Australia, driven by tight supply, high population growth, and comparatively attractive yields. “Private capital has also been active in South Australia’s industrial market,” Mr Laycock said.
Next Phase: Poised for Strategic Growth
Looking ahead, our experts anticipate a healthy 12–18 months across most markets.
Mr Ryan said the mood was of “quiet optimism” in Victoria, with vacancy rates stabilised and a shortfall in new supply on the horizon. “Those who are investing now are positioning themselves well for the next phase of the cycle,” he said.
In New South Wales, Mr O’Brien expects sustained demand in industrial assets and regional centres, alongside targeted value-add plays in the office sector. “We’re seeing savvy investors buy older buildings and add value via ESG upgrades and tenant reconfiguration,” he said.
Mr King said Queensland’s resilience, infrastructure pipeline, and demographic tailwinds were “positioning it as a standout destination for domestic and international capital.”
And in South Australia, high yields and low barriers to entry will continue to draw robust interest.
“As the market moves back into an upswing, offshore groups will return to the market attracted by the relatively high yields compared to the major markets, and the low entry costs,” Mr Laycock said.
