Premium office property poised for strong growth
Commercial property investment is set to surge in 2025, with premium assets in key CBD locations expected to lead the market recovery.
According to CBRE’s latest forecast, commercial property investment volumes are projected to grow by 15 per cent to $36 billion in 2025, with a further increase of 23 per cent expected in 2026, pushing the total to $44 billion.
The office sector is emerging as the standout performer, with CBRE predicting a 25 per cent growth in investment volumes, significantly outpacing the 10 per cent growth expected in industrial, retail and hotel sectors.
Sydney and Brisbane office markets are positioned to lead the recovery, benefiting from a widening rent gap between existing buildings and newer developments. “The major contractionary activity and sublease availability of the past few years appears to have passed,” CBRE reported, noting that premium properties in Sydney’s CBD are expected to see exceptional rental growth and capital appreciation.
Melbourne’s office market, despite recent challenges, is showing signs of improvement through increasing centralisation into its CBD, driving higher absorption rates and rental growth.
The industrial property sector continues to demonstrate resilience, with Australia maintaining one of the lowest vacancy rates globally at 2.5 per cent. However, CBRE indicates that normalised demand levels may put upward pressure on vacancy rates throughout the year.
Premium industrial and logistics assets in core locations are expected to maintain strong demand, although rental growth patterns will vary significantly across different markets. “Pockets of exceptionalism around premium property and precincts will emerge in 2025,” CBRE stated, highlighting the potential for select assets to significantly outperform the broader market.
The momentum is expected to continue beyond 2025, with CBRE projecting investment volumes to reach new heights as the market recovery gains further traction. “Brisbane and Sydney are likely to be the outperformers once again in 2025,” CBRE said, pointing to strong fundamentals and increasing demand in these key markets.
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