Melbourne remains an attractive city for investment, growth and long-term opportunity, according to the latest research from Knight Frank.
The firm’s This Is Melbourne report delves into the city’s commercial landscape, highlighting the enduring fundamentals that keep Melbourne at the forefront of long-term strategies for investors.
“Melbourne continues to stand out as one of Australia’s most compelling real estate markets,” said Knight Frank Managing Director Victoria Dominic Long.
“It is Australia’s strongest long-term growth city with the fastest growing population, the most diversified economy, worldclass liveability, unparalleled infrastructure investment and the most affordable major market for office, industrial and residential property.
“Melbourne’s population growth, which is leading the nation, is one of the biggest fundamentals driving investment interest in the city.
“It will become Australia’s largest city by the 2030s, when its population is set to overtake Sydney.”
Knight Frank’s This Is Melbourne report found Melbourne’s population has grown 1.8% per year since 2000, faster than any advanced global economy, supported by strong migration, affordability, and employment opportunities.
In 2025, it had the largest annual population increase of any Australian city, with the addition of 123,500 people. Not only is the population growing, but it is also the best educated, with the highest proportion of degree holders and best NAPLAN scores.
Mr Long said population growth in Melbourne would drive demand for commercial space including for office, industrial and retail, as well as for homes.
“Melbourne’s office market is one the most attractive to acquire and occupy,” he said.
“For investors looking for value and growth, the city’s office market offers very attractive expected total returns, while for occupiers Melbourne rents are much more affordable than other major CBDs, being 46% cheaper than Sydney and 13% cheaper than Brisbane.
“The industrial market in Melbourne is one of the leading markets around Australia, offering the scale, affordability and land availability that other capitals simply can’t match, with 34 million square metres of stock and capacity for future development.
“Meanwhile, Melbourne’s CBD retail market is experiencing a resurgence, underpinned by tightening vacancy. Retail confidence is back, premium brands are expanding, and the CBD is thriving again.
“In the residential market, Melbourne leads the nation in emerging living sectors, making up 54% of all national build-to-rent units and seeing strong growth in student accommodation and a strong construction pipeline. With more than 300,000 international students, this sector offers a huge institutional opportunity.”
Previously, Knight Frank’s Australian Horizon 2026 report also found Melbourne was a compelling proposition for patient investors in 2026, with the prospect for strong growth over the long term, particularly for CBD office assets.
“Melbourne has been slower to turn the corner and investors risk missing the bigger picture amidst the noise,” the report read.
“The negatives of taxation are widely appreciated but not the prospect for strong growth over the long term.
“Similarly, investors are aware of the high overall vacancy rate but fewer are tuned into the looming slowdown in new supply.
“Off the back of a larger downturn than in other cities, downside risk is now limited and those prepared to look through the current headwinds can take advantage of very attractive pricing.”
Knight Frank’s Head of Research & Consulting Victoria and This Is Melbourne report author Dr Tony McGough said Melbourne’s attractiveness to investors was underpinned by not only population growth, but its diverse and resilient economy and unprecedented infrastructure investment.
“Melbourne is Australia’s most economically diverse city, and it has had stable growth over the past 25 years,” he said.
“The city has a highly educated workforce, with more than 43% of Victorians aged 20 to 64 holding a bachelor’s degree, and it is Australia’s education capital, home to 466,000-plus higher-education students.
“With more than $200 billion invested in transport infrastructure from 2014 until 2036, the level of infrastructure investment in Melbourne is unmatched nationally and will not only transform connectivity, but underpin asset values.
“On top of all this Melbourne is the world’s fourth most liveable city, underpinned by globally recognised arts, sport and entertainment with an event calendar including the Australian Open, F1 Grand Prix, AFL and global concert tours, as well as a world-leading food and coffee culture.”
To download Knight Frank’s This is Melbourne report click here.
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