Australian commercial real estate (CRE) investment grew further in Q3 2024, with $11.5 billion in transactions, up from $9.5 billion in Q2. This marks the first two consecutive quarters of growth in CRE transaction volumes since 2020, according to Cushman & Wakefield’s latest Capital Markets Marketbeat report. 

The performance follows recent modelling from Cushman & Wakefield showing CRE asset values had bottomed, with a multi-year rebound taking shape. 

The Retail sector led the charge in Q3 with its strongest performance since 2021, attracting $3.8 billion in investments. This was supported by the sale of several large shopping  centres, including Westpoint Shopping Centre in Blacktown for a reported $900 million – the  largest standalone retail transaction in Australian history. Transactions over $100 million  comprised nearly two-thirds of retail investment volumes. 

The Logistics & Industrial sector followed with a recorded $3.5 billion, up from $2.6 billion in  Q2, as low vacancy and sustained rental growth continue to drive investment activity. 

Despite slightly subdued activity in the Office market, several significant transactions totalling $2.2 billion for the quarter showed vendor and buyer price expectations narrowing and signs that the pricing cycle is reaching its lowest point, especially for core prime assets. These included the sale of 333 George Street in Sydney to Deka Immobilien for $392 million and  PAG (ASIA)’s purchase of 367 Collins Street in Melbourne for $315 million. 

The Alternatives sector, including care, accommodation, mixed-use, service and storage assets, continued its upward momentum posting $2 billion in Q3 as it performs in line with  five-year averages. The sector’s steady growth demonstrates rising investor interest across  various sub-sectors, particularly the living and care sectors. 

Foreign investors are looking to take advantage of countercyclical opportunities, with  significant interest from pockets of core capital that have been dormant for the past 24  months. Despite being below the long-term average proportional to domestic investment, it  was another relatively strong quarter with $2.8 billion in offshore capital, including significant inflows from the USA, Japan and Germany.  

Cushman & Wakefield’s National Head of Research, Dr Dominic Brown, said the rise in  transactions highlights the re-entry of capital as pricing and economic conditions improve.  

“Greater clarity of the interest rate environment, with anticipated cuts next year, has seen the  investment market take significant steps toward recovery,” he said. 

“With 2024 year-to-date investment volumes already exceeding the entirety of 2023, we  expect momentum to continue to build into 2025 as investors become more active in  deploying capital into the Australian commercial real estate market. 

“While the office sector gears up for a rebound, the industrial sector thrives on low vacancy  and strong rental growth. The retail sector is also ahead in its recovery, with elevated  demand driving improved prices and tighter yields. 

“We expect a gradual increase in foreign investment as improving economic conditions and sector recoveries attract increased international capital, particularly in emerging asset classes like build-to-rent and data centres.”