Foreign investment drives Australian commercial property surge

Australian commercial property has experienced a significant boost in foreign investment throughout 2024, with transaction volumes reaching $76.64 billion, marking a 19.2 per cent increase from the previous year.

Ray White Head of Research, Vanessa Rader, said the market has shown clear segmentation across different price points, with domestic and international investors targeting specific sectors.

“The Australian commercial property market has demonstrated remarkable resilience, with foreign investment surging particularly in the final quarter of 2024,” Ms Rader said. “Domestic private investors have maintained their dominance in the sub-$50 million segment, accounting for approximately three-quarters of transactions, primarily focusing on industrial assets across NSW and Victoria.”

Ms Rader said the institutional segment, comprising deals over $100 million, showed substantial momentum in the final quarter. “We’ve seen institutional transactions reach $30.43 billion, with Sydney accounting for more than $22 billion,” she said.

“Foreign investors have emerged as dominant players in this segment, representing over 60 per cent of purchases while accounting for 51.2 per cent of sales.” The surge in foreign investment has been particularly notable from specific regions, Ms Rader said.

“United States investors have dominated acquisition activity in 2024, leveraging their currency advantage to diversify portfolios,” she said. “Japanese capital has also strengthened its presence, followed by steady investment flows from Singapore, Hong Kong, and Canada.”

According to Ms Rader, early 2025 has already shown promising signs of further market expansion. “We’re seeing an expanding pool of international capital, with Korean institutional investors emerging as significant new players,” she said. “These investors are particularly attracted to build-to-rent and student accommodation developments in major metropolitan markets, which comes at a crucial time for Australia’s housing supply challenges.”

Ms Rader said the outlook for 2025 remains positive, with Australia’s market fundamentals continuing to attract global investment. “The combination of Australia’s transparent market conditions, robust regulatory framework, and strategic position in the Asia-Pacific region suggests sustained offshore interest through 2025,” she said.

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