Australia’s pet industry has experienced impressive growth, making it an increasingly attractive asset class for commercial property investors. With a population of 26 million people and nearly 29 million pets—including 6.4 million registered dogs—demand for pet-related services has surged in recent years.

This thriving industry, now valued at $14 billion, continues to expand, driven by Australians' deep connection with their pets. With more pets than people, Australia boasts one of the highest pet ownership rates globally.

According to IBIS World, the pet industry grew by 4.8% per year on average between 2018 and 2023. Australians collectively spend $33 billion annually on their pets, with food accounting for over half (51%) of this expenditure, followed by veterinary costs (14%).

The robust demand for veterinary clinics, pet supply stores, and related services has created an enticing opportunity for property investors.

Veterinary clinics have demonstrated strong performance as a commercial asset, offering reliable income streams and consistent tenant demand. For investors, the sector’s resilience and ability to meet ongoing consumer needs present a compelling reason to consider it for their portfolios.

Tightening yields in 2024 have further highlighted the sector’s investment potential. Yields for veterinary clinics and similar assets have compressed to 5.94%, down from 6.31% in 2023, indicating growing investor confidence. This yield compression reflects the sector's increasing value and stable performance, making it a favourable option for those seeking steady, long-term returns.

The price point for assets in this industry is highly appealing, particularly for first-time commercial property investors. Over the past 24 months, transactions have ranged from as low as $730,000, with an average sale price of $2,306,069.

The highest sale in this period was the Westbourne Park Adelaide Vet which is leased to Australia and New Zealand’s largest vet group Vet Partners, which sold for $5,855,000 in August 2023. These price points offer flexibility and accessibility, whether investors are looking to make a smaller entry into the market or secure a premium asset.

As Australians’ attachment to their pets continues to grow, the pet care industry is expected to maintain strong demand for services, ensuring long-term stability. Veterinary clinics, in particular, are essential businesses that provide reliable tenants and steady cash flow, backed by high occupancy rates and the increasing need for pet healthcare.

For commercial property investors, this translates to a low-risk investment with the potential for strong returns, both in terms of rental income and capital growth. The industry's resilience, even during economic downturns, makes it a recession-proof ‘essential service’ asset class, offering stability in uncertain markets.

The Australian pet industry presents a unique and attractive opportunity for commercial property investors. With tightening yields, competitive price points, and strong long-term demand, veterinary clinics with lease covenants from the likes of Vet Partners and Greencross, and vet retailers with national brands including Petstock, Petbarn and Pets Domain stand out as a smart and reliable investment choice.

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