Commercial Real Estate Market In Australia - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Commercial Real Estate Market in Australia is segmented by Type (Office, Retail, Industrial and Logistics, Hospitality, and Others) and by Key Cities (Sydney, Melbourne, Brisbane, Adelaide, Canberra, and Perth). The report offers market sizes and forecasts in value (USD billion) for all the above segments.

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Australia Commercial Real Estate Market Size

Australia Commercial Real Estate Market Summary
Study Period: 2019-2028
CAGR: > 8.5 %

Major Players

Australia Commercial Real Estate Market Major Players

*Disclaimer: Major Players sorted in no particular order
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Australia Commercial Real Estate Market Analysis

The size of Australia Commercial Real Estate market is USD 70 billion in the current year and is anticipated to register a CAGR of over 8.5% during the forecast period.

The Australian property sector experienced significant uncertainty and transformation in 2020. The COVID-19 pandemic saw employees choosing to work flexibly and increased consumer demand for e-commerce. This disrupted the market and created several opportunities for investors, landlords, and occupiers alike.

  • In 2022, it was a new era for commercial real estate in Australia, with low-interest rates, sustained government stimulus, and a population emerging from pandemic-induced lockdowns that are expected to increase their spending. The market outlook looks promising for commercial real estate investors, bolstered by cheap debt, structural changes, and the under-allocation of real assets.
  • Two major forces influencing Australia's commercial real estate market are urbanization and population expansion. Further, the business has seen several trends recently, including improved accessibility, shared office spaces, and digital connectivity. In particular, with a hard climate for many areas on the horizon, more innovation in the sector will be necessary to maintain consistent growth. Even before the coronavirus epidemic struck the country, a fall in the value of commercial building activity in Australia was already expected.
  • Over the years, Melbourne and Sydney's prime office space has experienced high rents and little vacancy. While interest in flexible working spaces has fluctuated, investment in office real estate has remained consistent. This is partly because of the effects of the coronavirus epidemic. Typically, these coworking spaces are hired out temporarily. Companies that don't want to commit to a lengthy lease for office space that might not be completely utilized may find this to be appealing.

Australia Commercial Real Estate Industry Segmentation

Commercial real estate (CRE) is a property used exclusively for business or workplace purposes or to generate cash flow in some way for the owner or lessee.

The Commercial Real Estate Market in Australia is segmented by Type (Office, Retail, Industrial and Logistics, Hospitality, and Others) and by Key Cities (Sydney, Melbourne, Brisbane, Adelaide, Canberra, and Perth). The report offers market size and forecasts for the Australia Commercial Real Estate market in value (USD billion) for all the above segments.

By Type
Office
Retail
Industrial and Logistics
Hospitality
Others
By City
Sydney
Melbourne
Brisbane
Adelaide
Canberra
Perth

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Australia Commercial Real Estate Market Trends

This section covers the major market trends shaping the Australia Commercial Real Estate Market according to our research experts:

Office real estate is expected to drive the market

In the third quarter of 2022, the yield of prime office real estate in the central business district of Western Australia was 6.36 percent. In comparison, the yield of prime office real estate in New South Wales was 4.5 percent. As of July 2022, about 40 percent of investment in the commercial real estate in Australia went to the office sector. That same year, the industrial sector received about 18 percent of the commercial real estate investment in the nation.

In the third quarter of 2022, the incentives for prime office real estate in the central business district of Western Australia were the highest at 49 percent. In contrast, the Australian Capital Territory had the lowest incentives at 25 percent. In the states of Queensland and Victoria, incentives for prime office real estate were at 41.1 and 40.3 percent, respectively. The central business district in New South Wales had the highest average net face rent of prime office property in Australia in the third quarter of 2022, with an average net face rent of 1,323 Australian dollars per square meter. The central business district in Victoria had an average net face rent of 689 Australian dollars per square meter of office property in Australia.

In the third quarter of 2022, the office vacancy rate in the central business district of Perth, Australia was the highest with a rate of around 19.3 percent. The central business district of Sydney had a office vacancy rate of 13.7 percent. In November 2022, the office occupancy as a share of pre-COVID levels in the central business district of Perth, Australia was 80 percent. Canberra CBD office occupancy was at 52 percent of pre-COVID levels in the same month.

Commercial Real Estate Market in Australia - Yield of prime office CBD real estate in Australia

Increase in Investments in Commercial sector

The value of commercial real estate transactions in Australia is on track to return to pre-COVID levels this calendar year, following a surge in logistics deals. Together with strong demand for other income-earning real estate asset classes, the strong recovery in 2021 was built on about USD 50 billion in the capital that was looking to ride the logistics boom.

Led by the record-breaking USD 3.8 billion acquisition of the Milestone logistics portfolio by ESR, industrial and logistics sales rose to USD 13 billion over the first nine months of the year, compared to the volume in 2020, which was USD 5.3 billion.

Although many malls are still struggling due to the rise of online sales and lockdown restrictions, retail investment activity has also rebounded. While Singapore, China, and Hong Kong drastically reduced their economic commitment to Australian real estate this year, the USA and Germany represented growth in investment this year, demonstrating the growing confidence that foreign buyers have in the local market. As of July 2022, about 45 percent of commercial real estate transaction activities in Australia were in New South Wales. That same year, Western Australia had about 1.5 percent of the commercial real estate transaction activities in the nation.

According to Commercial Real Estate, the value of investment-grade industrial property in Australia will pass the value of office property for the first time in 2026. This is because logistics real estate values are going up and new, larger facilities are being built to accommodate the growth of e-commerce.

Commercial real estate in Australia - Share of investment in commercial real estate in Australia

Australia Commercial Real Estate Industry Overview

The Australian commercial real estate market is strong and highly competitive. Australian commercial real estate is becoming a preferred destination for global institutional investors, driven by robust office space take-up, declining vacancy levels, and rising rentals. Small-scale developers are also merging with big real estate developers or exiting the market. Some of the country's major commercial real estate players include Lendlease Corporation, Scentre Group Limited, Mirvac, Pact Construction, and Multiplex Constructions Pty Ltd.

Australia Commercial Real Estate Market Leaders

  1. Lendlease Corporation

  2. Scentre Group Limited

  3. Mirvac

  4. Pact Construction

  5. Multiplex Constructions PTY Ltd

*Disclaimer: Major Players sorted in no particular order

Australia Commercial Real Estate Market Concentration

Australia Commercial Real Estate Market News

  • October 2022: Xcommercial has opened its fifth office in Sydney, following a merger and acquisition of Industrial Zone Real Estate in Padstow in the South-West Corridor. Their strategic growth plans include the opening of offices in each of Sydney's main industrial and commercial markets.
  • August 2022: Colliers International, a top provider of diverse professional services and investment management, announced the acquisition of a majority stake in Peakurban Pty Limited, one of Australia's fastest-growing engineering firms. Under the special partnership model of Colliers, the senior leadership team of Peakurban will continue to have a sizable stake in the company. The company will adopt the "Colliers Engineering & Design" moniker and become a part of Colliers' current Australian operations.

Australia Commercial Real Estate Market Report - Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Drivers

    2. 4.2 Restraints

    3. 4.3 Opportunities

    4. 4.4 Value Chain / Supply Chain Analysis

    5. 4.5 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.5.1 Threat of New Entrants

      2. 4.5.2 Bargaining Power of Buyers/Consumers

      3. 4.5.3 Bargaining Power of Suppliers

      4. 4.5.4 Threat of Substitute Products

      5. 4.5.5 Intensity of Competitive Rivalry

  5. 5. MARKET INSIGHTS

    1. 5.1 Current Economic Scenario and Consumer Sentiment

    2. 5.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 5.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

    4. 5.4 Insights into Existing and Upcoming Projects

    5. 5.5 Insights into Interest Rate Regime for General Economy and Real Estate Lending

    6. 5.6 Insights into Rental Yields in the Commercial Real Estate Segment

    7. 5.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 5.8 Insights into Public-Private Partnerships in Commercial Real Estate

    9. 5.9 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, Property Management)

    10. 5.10 Impact of Covid-19 on the Market

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Type

      1. 6.1.1 Office

      2. 6.1.2 Retail

      3. 6.1.3 Industrial and Logistics

      4. 6.1.4 Hospitality

      5. 6.1.5 Others

    2. 6.2 By City

      1. 6.2.1 Sydney

      2. 6.2.2 Melbourne

      3. 6.2.3 Brisbane

      4. 6.2.4 Adelaide

      5. 6.2.5 Canberra

      6. 6.2.6 Perth

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Overview (Market Concentration and Major Players)

    2. 7.2 Company Profiles

      1. 7.2.1 Lendlease Corporation

      2. 7.2.2 Scentre Group Limited

      3. 7.2.3 Mirvac

      4. 7.2.4 Pact Construction

      5. 7.2.5 Multiplex Constructions Pty Ltd

      6. 7.2.6 Meriton Apartments Pty Ltd

      7. 7.2.7 Stockland

      8. 7.2.8 Frasers Property

      9. 7.2.9 Pellicano Builders

      10. 7.2.10 Qube Property Group Pty Ltd*

      3. *List Not Exhaustive

    3. 7.3 Other Companies

  8. 8. FUTURE OF THE MARKET

  9. 9. APPENDIX

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Australia Commercial Real Estate Market Research FAQs

The Australia Commercial Real Estate Market is studied from 2019 - 2028.

The Australia Commercial Real Estate Market is growing at a CAGR of >8.5% over the next 5 years.

Lendlease Corporation, Scentre Group Limited, Mirvac, Pact Construction, Multiplex Constructions PTY Ltd are the major companies operating in Australia Commercial Real Estate Market.

Australia Commercial Real Estate Industry Report

Statistics for the 2023 Australia Commercial Real Estate market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Australia Commercial Real Estate analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.

Australia Commercial Real Estate Report Snapshots

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