Big capital heads to Australia as geopolitical turmoil hits global markets

Offshore investors have chased exposure to Australian assets.

Interest rate cuts helped to propel a robust 13 per cent year-on-year rise in commercial property transactions in Australia in the first half of 2025, new CBRE data shows.

A total of $15.5bn in office, industrial, retail, hotel and living assets changed hands, buoyed by two interest rate cuts and the expectations of more to follow.

The industrial and logistics sector was a key driver, with $5.4bn in transactions – up 98 per cent year-on-year – buoyed by an uptick in portfolio deals.

Big sales were struck by firms including Frasers Property, Stockland and Gateway Capital, partly as offshore investors chased an exposure to local assets. Retail deals tallied $4.7bn, a 29 per cent jump, with investors seeing relative value in the sector following a rebasing in rents in recent years.

Conversely, the office sector recorded an 11 per cent decline in transactions to $3.8bn, partly as large deals were harder to finalise. A slice in Sydney’s Salesforce Tower traded but the market is still waiting for Blackstone’s sale of a 75 per cent stake in Grosvenor Place to be finalised.

CBRE Pacific head of capital markets Flint Davidson said capital was backing logistics and retail sectors, “leading to increased volumes, while in office increased pricing expectations off the back of sound rental growth has created a pricing mismatch, which has reduced volumes”. “As we have seen in previous cycles, the availability of opportunities in Sydney has diminished and capital has had to shift to markets including Brisbane, Melbourne and Perth to find value,” he said.

CBRE head of capital markets research Tom Broderick said transactions also declined in the hotel and living sectors, however the outlook remained positive, with the market pricing in more rate cuts in Australia over the coming 12 months.

Australia has locked in its status as a safe haven amid a period of geopolitical turmoil.

Offshore investment in Australian commercial property was up 17 per cent year on year in the first half, accounting for 28 per cent of the total capital deployed in Australia.

Mr Broderick said Australia’s robust population growth and stable economy underscored its appeal as an investor safe haven.

“The office sector continued to be the primary target in the first half, attracting 45 per cent of the total investment from offshore groups, boosted by recent price adjustments and the significant scale individual office assets offer,” he said.

“Industrial and logistics also witnessed substantial foreign investment in the first half, indicating broad appetite for this sector.”

North American investors dominated offshore activity accounting for $1.7bn in transactions, underpinned by a favourable exchange rate and the desire for greater global diversification.

Japanese investors followed, with $900m in acquisitions.

While this was down on previous years this might reflect a monetary policy shift in Japan, making investors more domestically focused.