The Australian retail property sector has delivered its second-strongest year on record, remaining the country’s most traded asset class for the third consecutive year.
Colliers’ latest Retail Capital Markets Investment Review reveals transactions climbed 48 per cent year-on-year to $13.16 billion in 2025.
Lachlan MacGillivray, Colliers Managing Director, Asia Pacific Retail Capital Markets, said sustained confidence in fundamentals had elevated retail to one of Australia’s most sought-after asset classes.
“Investment volumes have risen sharply, supported by resilient consumer spending, strong employment and a balanced integration of physical and online retail,” Mr MacGillivray said.
“Persistent supply and demand imbalances have created scarcity value across the sector, while a constrained development pipeline and robust occupier demand have helped retail enter a new phase of growth driven by stable income profiles and improving liquidity.”
Scale Steers Capital
Regional shopping centres generated the largest share of activity with $6 billion in sales, as investors pursued scale in growth catchments with stable income.
Neighbourhood centres recorded $2.9 billion in transactions, buoyed by retail exposure and limited new supply.
Mr MacGillivray said both formats delivered compelling fundamentals.
“Regional centres delivered record transaction volumes as investors targeted assets benefiting from retail floorspace scarcity, high occupancy and sustained sales growth,” he said.
“Neighbourhood centres also remained a key focus, supported by their defensive income characteristics, non-discretionary anchors, limited new supply and strong catchment fundamentals.”
Private Capital Moves Upmarket
Private capital is entering territory once dominated by institutions, pursuing larger transactions as borrowing conditions ease and asset values stabilise.
Improved access to debt lifted liquidity by 38 per cent, fuelling demand for neighbourhood centres, freestanding supermarkets, hardware assets and large-format retail.
“Lower debt costs and rising confidence have allowed private capital to pursue higher-priced assets traditionally dominated by institutions,” Mr MacGillivray said.
“A wealth effect created from land appreciation and earlier acquisitions has strengthened purchasing power while counter-cyclical investment strategies have prompted private groups to target long-term strategic assets in the $30 million to $100 million range.”
More Gains on the Horizon
Investor confidence shows no signs of waning, underpinned by strong fundamentals and structural scarcity.
There have been no new regional shopping centres delivered since 2018, and rising construction costs continue to constrain supply.
Meanwhile, prime centres are operating at 98.9 per cent occupancy, while online retail penetration is just 13 per cent - well below the United States’ 34 per cent.
“Strong occupancy levels and significant supply constraints are reinforcing investment conviction across the sector,” Mr MacGillivray said.
“We expect 2026 to build on this momentum, with premiums above current book values likely on key transactions. Chronic undersupply of retail floorspace and robust retail sales performance will continue to underpin investor confidence and drive competitive bidding.”
