Regional commercial property markets are increasingly being recognised by investors as genuine growth markets rather than simply high-yield alternatives to capital cities, with investment activity rising to its third-highest level on record in 2025, according to the latest research from Knight Frank.
The firm’s Australian Regional View found regional commercial property transaction volumes reached $6.2 billion in 2025, accounting for approximately 11% of the national volume, as population growth, economic diversification and infrastructure investment drive demand across the nation’s regional centres.
Retail is the most traded asset class, typically accounting for more than 40% of transactions, followed by industrial and hotels. Demand for seniors housing and care assets has also increased as Australia’s population ages.
The strengthening investment environment is being supported by favourable demographic trends. Regional Australia is home to approximately 8.9 million people, representing 32% of the national population – and this figure forecast to increase by around 10% over the next decade. Population growth is expected to be concentrated in well-connected coastal centres, including the Gold Coast, which is projected to have 19% growth, Wollongong (16%), Townsville (14%) and Newcastle (11%).
At the same time, many regional economies are becoming increasingly diversified, with sectors including healthcare, education, defence, logistics, renewable energy and advanced manufacturing contributing to employment growth and business expansion.
Knight Frank’s Australian Regional Review notes these structural changes, along with infrastructure investment in regional areas, are providing stronger foundations for commercial property demand across office, industrial and retail sectors.
Knight Frank Senior Economist and report author Alistair Read said the perception of Australia’s regional commercial property markets had shifted decisively over the past five years, with increased investor confidence in the long-term outlook.
“Once viewed primarily as a high-income but lower growth play for yield-hungry investors, cities such as Newcastle, Wollongong, the Gold Coast, Townsville, Wagga Wagga and Tamworth are now increasingly being seen as genuine growth markets underpinned by structural drivers of demand,” he said.
“Investors are increasingly recognising that many regional centres now possess the economic scale, population growth and industry diversity required to support long-term commercial property performance.
“Population decentralisation, major infrastructure investment and economic diversification are creating sustained demand across multiple commercial property sectors in regional location. These markets are increasingly generating growth from their own underlying fundamentals rather than simply following the capital city cycle.”
The report also identified rising tourism expenditure as a key support for regional property markets, with Tourism Research Australia forecasting tourism spending will increase by 22% to $233 billion by 2030. This growth is expected to drive demand for retail, hotel and service-related commercial assets across many regional locations.
Meanwhile, a resurgence in agricultural export industries is driving up the values of agricultural land and generating opportunity in new asset types such as glasshouses.
Knight Frank Head of Franchises and Investment Sales Mark Lafferty said investors were increasingly attracted to the growing depth and maturity of regional commercial property markets.
“Regional Australia’s commercial property markets have evolved considerably over the past decade. Many of these centres now benefit from population growth, significant infrastructure pipelines and increasingly diversified economies that support long-term investment performance,” he said.
“Population growth across regional Australia continues to outpace the historical average, strengthening the fundamentals across the market. Darwin and Townsville have seen population growth return after several years of stagnation, while growth has strengthened in Wollongong, Newcastle and the Gold Coast.
“As our franchise network continues to expand across regional Australia, we are seeing growing interest from both local and interstate investors seeking exposure to high-quality assets in markets supported by strong economic fundamentals and attractive growth prospects.
“Regions that we expect to see rapid growth in the future include Geelong, the Sunshine Coast and the Fraser Coast. These cities combine lifestyle appeal, relative affordability and strong employment opportunities.”
The report highlights Newcastle, Wollongong, Gold Coast, Townsville, Tamworth, Wagga Wagga, Cairns, Mackay, Darwin and Hobart as regions benefiting from unique economic drivers, but sharing common strengths including population growth, employment creation, infrastructure investment and improving business confidence.
Related Articles
