One Market, Many Realities: What’s Shaping Australia’s Commercial Property

Australia’s commercial property market is finding balance in 2025—but the story varies sharply across asset classes.

The latest MSCI Private Assets in Focus H1 2025 report, authored by executive director and head of private assets research, Pacific, Ben Martin-Henry reveals a market cautiously recovering. Total returns rose 4.9 per cent over the year, the best result since early 2023, while capital growth remained slightly negative at -0.4 per cent.

Martin-Henry will unpack these trends in his keynote, One Market, Many Realities: The State of Australia’s Commercial Real Estate in 2025, at The Urban Developer’s Commercial Real Estate Summit in Sydney on October 30.

Office: Signs of stabilisation

The office sector continues its recalibration, but stability is emerging.
Sydney remains the country’s magnet for investment, recording $3.2 billion in office transactions, with 80 per cent sourced from offshore capital, underscoring sustained global confidence in premium-grade assets.

Vacancy trends are diverging: Sydney and Melbourne CBD rates are beginning to improve, while Brisbane and Perth remain under pressure. Larger transactions are returning too—deals above $250 million jumped 75 per cent year-on-year, reflecting renewed institutional appetite.

Retail: From headwinds to tailwinds

Retail is leading the rebound, topping all sectors with $8.4 billion in sales and recording its fourth straight quarter of positive capital growth. Experiential and neighbourhood formats continue to outperform as consumers shift from goods to experiences.

Retail yields also compressed during the first half of 2025—one of the few sectors to do so—suggesting investors view well-located retail as resilient amid ongoing economic uncertainty.

Healthcare and childcare: The core of community infrastructure

Healthcare remains among the most stable performers, delivering steady income returns despite modest capital growth. The sector’s long leases and essential-service profile continue to attract institutional capital.

Childcare is increasingly seen through a similar lens—an asset class tied to demographic growth, government support, and social value. Investors are treating both sectors as defensive, needs-based infrastructure critical to urban communities.

Alternatives: Data and living assets lead

Alternatives are now part of the mainstream investment narrative. More than $6 billion was deployed into the living sectors—including build-to-rent, student accommodation and seniors housing—in 2025, with seniors housing accounting for $4.4 billion.

Data centres continue to surge, with $US5 billion in trades across APAC, and Australia emerging as a regional powerhouse with 7GW in planning or construction.

Finding balance across many realities

According to MSCI, asset selection drives 67 per cent of portfolio performance differences, reaffirming that quality and fundamentals matter most in this stage of the cycle.

In 2025, office is steadying, retail is recovering, healthcare and childcare remain essential, and alternatives are expanding—together defining a commercial market of many realities, not one.

These themes, and the opportunities within them, will be unpacked in detail at The Urban Developer’s Commercial Real Estate Summit on October 30 in Sydney.

Event details

Date: Thursday, October 30, 2025
Location: ILUMINA | Sydney
Time: 8.30am–3.30pm AEDT
Audience: 150-plus C-Suite Professionals

Tickets:
TUD+ Members: $370 + GST
Non-members: $495 + GST

Click here to register