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Industrial assets remain the standout in commercial property, with Sydney reaching record-high buyer enquiries while Canberra, Adelaide, and Hobart’s vacancy rates plummet.
The latest Raine & Horne Commercial Insights report showed that an increase in consumer confidence and an undersupply of industrial assets have been driving commercial property prices higher.
The report found that three RBA rate cuts that year, along with easing cost-of-living pressures, had pushed consumer confidence to a three-year high, boosted disposable income and signalled strength for the commercial market.
Raine and Horne Group CEO Chris Nicholl said the rise in sentiment and the additional disposable income have benefited the nation’s business sector, which would then fuel the commercial property market.
“A less obvious side effect of rate cuts is that we are seeing a growing number of investors turn to commercial property seeking high yields and regular income,” Nicholl said.
Growing demand from investors has seen key areas such as Sydney’s inner west report their highest-ever level of buyer enquiries.
The report found that the supply of industrial properties, like those used to support e-commerce businesses as well as brick-and-mortar stores, was struggling to keep up with the demand of the market
According to Nicholl, the undersupply of assets has created a more competitive market, forcing prices to rise with buyers willing to pay more to secure industrial properties in prime locations.
“Across a number of major centres, including Canberra, Adelaide and Hobart, vacancy rates for industrial property remain close to zero. This continues to drive up values in this asset class,” Nicholl said.
Additionally, the report said that access to infrastructure, as well as the planned developments, can also be a key driver of commercial markets in a local area.
Nicholl said that the Hunter Valley, Wagga Wagga and Brisbane were all seeing a surge in interest in commercial offerings due to planned or recently completed infrastructure projects.
“The upcoming 2032 Brisbane Olympics, coupled with major infrastructure projects such as the Cross River Rail, are creating new commercial property ‘hotspots’ in the city, especially those areas within 10 kilometres of the CBD,” Nicholl said.
Raine & Horne said their report showed a wealth of opportunities is available in the commercial market.
They said the current market provides an ideal opportunity for owners to sell assets and release capital gains for other projects.
Similarly, owner-occupiers and investors have benefited from rate cuts, which have increased their borrowing capacities, providing opportunities to enter the commercial market before values rise further.
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