Australia’s commercial property market is showing early signs of recovery, with income performance improving across most sectors and investor sentiment gradually stabilising, according to KPMG’s latest market update.
The industrial sector continues to lead the way, supported by strong tenant demand and limited supply. It has now recorded two consecutive quarters of growth, with total returns reaching 3.3%. Retail property is also on more stable footing, driven by higher foot traffic from returning international visitors, students and office workers.
While office sector returns remain in negative territory, key indicators suggest conditions are no longer deteriorating. Vacancy rates have stopped rising, demand is strengthening for high-quality, well-located space and capital value declines are beginning to ease.
Importantly, KPMG’s uncertainty index has fallen across all commercial sectors, with a notable decline in office market volatility. Analysts point to interest rate cuts in early 2025, along with strong population growth and employment conditions, as key stabilising factors.
Still, KPMG cautions that global economic headwinds and structural shifts in tenant demand could affect the pace of recovery. Investors are advised to monitor asset quality and location closely in this evolving environment.
As the market shows early signs of recovery, now is the time to reassess your commercial property strategy. Whether you’re looking to enter, expand, or reposition your portfolio, informed decisions will be key in this shifting environment. Contact Us today to discuss market opportunities and ensure your investments are positioned for long-term growth.