Liquidity Returns in Australia’s Commercial Property Investment Sector as 2024 Deals Top $29 Billion

Commercial property transaction activity is on the rise, with $29.2 billion in Australian office, retail, industrial, hotel and living sector assets changing hands in 2024.

The preliminary end-of-year total is 21% up on 2023 levels according to CBRE data, highlighting obvious green shoots of recovery in the commercial property investment sector.

CBRE’s Australian Head of Capital Markets Research Tom Broderick noted, “Investors are acknowledging the value on offer in various sectors of Australia’s real estate market. Pricing seems to have stabilised after a period of yield softening. Additionally, many existing assets are selling significantly below replacement cost, underscoring the value proposition.”

The office sector staged the biggest comeback, regaining its status as the most traded commercial property sector after $8.4 billion in transactions – up 56% y-o-y. Major transactions in Sydney, including Mitsui Fudosan’s acquisition of a 66% stake in 55 Pitt Street, were key drivers of this uplift.

Retail also rebounded strongly to be the second most active sector, with $7.3 billion in assets changing hands, up 34% y-o-y.

Industrial & Logistics was in third position with $7.1 billion in transactions (+14%), followed by the fast-growing living sector, with $4.8 billion in deals (+6%).

Hotels was the only sector where transactions declined, with $1.6 billion in assets traded, compared to $2.5 billion in 2023.

Offshore investors were particularly acquisitive according to CBRE’s data, accounting for $8.3 billion in acquisitions, 37% up on the prior year. This represented 28% of the overall 2024 transaction tally, compared to 25% in 2023.

CBRE’s Pacific Head of Capital Markets Flint Davidson noted, “Australia has proven to be one of the more liquid markets in Asia Pacific with price corrections showing genuine value, which is hard to find in developed markets across the region. Australia’s stability and transparency is a key drawcard, as is our strong population growth, which is driving demand for real estate.”

Offshore buyers were most active in the office sector, given the deep discounts on offer compared to peak pricing and replacement costs.

Living was the next most favoured sector, following several major student accommodation and build-to-rent transactions, including the Ontario Teachers’ Pension Plan and Hines acquisition of the Arklife BTR Portfolio.

By country, the United States became the number one source of overseas investment in 2024, accounting for $3.6 billion in deals – more than double last year’s investment.

Japanese investors dropped to second place, but remained active, with $1.9 billion in acquisitions (-9% y-o-y), while Singaporean investors accounted for deals totaling circa $1 billion.