Offshore Investors Surge Back Into Australian Commercial Property
Foreign buyers are making a strong comeback to Australia’s commercial real estate market, with investment volumes rising significantly in 2025 after two years of subdued activity.
According to MSCI Real Capital Analytics, overseas buyers have purchased $7.4 billion worth of Australian commercial real estate so far this year, representing a 26% increase compared to the same period last year. Foreign investment is now well on track to exceed the levels seen in both 2023 and 2024.
Offshore buyers now account for 44% of all commercial real estate purchases this year, substantially above the long-term average. New South Wales has emerged as the top destination, attracting 55% of offshore sales volumes over the past 12 months, followed by Queensland at 20%. Victoria has seen its share of foreign capital drop to just 15%, down significantly from its peak of 42% five years ago. This decline is attributed to strong tax disincentives and weaker overall economic growth in the state, causing both domestic and foreign investors to look elsewhere.
Industrial property continues to be the most attractive sector for foreign investment, with $2.9 billion in sales recorded during the first half of 2025. Office assets followed closely behind at $2.8 billion, while retail properties saw $1.5 billion in sales to offshore groups.
Despite total office sales remaining well below pre-pandemic levels, foreign investors are showing greater confidence in this sector than domestic buyers. More than half of the total capital invested in office assets between January and June has come from overseas investors.
Several factors are driving this renewed interest from offshore buyers. Recent interest rate cuts have reduced capital costs and triggered the beginning of cap rate compression, creating new acquisition opportunities that may have previously been considered unviable.
The global risk landscape is also influencing investment decisions, with some investors redirecting capital away from traditionally dominant markets like the United States due to increasing political volatility and fiscal uncertainty. Australia’s relative political and economic stability has become increasingly attractive in this context.
American capital has led this investment surge, accounting for the largest share of offshore investment into Australia so far this year. Currency movements have likely contributed to this trend, with the Australian dollar trading low against the US dollar, even hitting a five-year low in April.
The Australian government has also implemented reforms to streamline the Foreign Investment Review Board approval process, making it easier for passive institutional investors and those with strong compliance records to invest in non-sensitive sectors like commercial real estate.
*This information is general in nature and does not take into consideration your individual circumstances. Please contact us for further information.
