Offshore buyers make strong return to Aussie commercial property

Offshore investors have made a strong return to the commercial property market in 2025, marking a shift in sentiment following two years of subdued activity. 

So far this year, overseas buyers have snapped up $7.4 billion worth of Australian commercial real estate, according to MSCI Real Capital Analytics.

It represents a 26% rise in volumes compared to the same period last year, with offshore sales well on track to exceed the levels seen in 2023 and 2024.

Around 44% of all commercial real estate purchased this year was by offshore buyers, well above the long-term-average level.

When it comes to where offshore buyers are looking to invest, New South Wales is the top destination, accounting for 55% of sales volumes over the past 12 months.

Queensland followed at 20%, while just 15% of offshore capital went to Victoria – down from a peak of 42% five years ago.

Offshore investors bought $2.8 billion worth of office property in Australia during the first half of 2025. Picture: Getty

Both domestic and foreign investors have been increasingly shunning Victoria due to a combination of strong tax disincentives and weaker overall economic growth in the state.

Industrial property has continued to attract the largest share of foreign investment, with $2.9 billion in sales recorded over the first half of 2025.

Office assets were close behind, at $2.8 billion, while retail has seen $1.5 billion in sales to offshore groups.

While total office sales remain well down compared to the pre-pandemic era, offshore investors are showing more confidence in the sector than domestic buyers.

Of the total invested into office assets between January and June, over half has come from overseas investors.

There are a few factors drawing offshore buyers back. Two interest rate cuts have reduced capital costs and triggered the beginning of cap rate compression, reopening acquisition opportunities that may have been previously shelved.

Australia’s retail property market has seen $1.5 billion in sales to offshore groups over the first six months of this year. Picture: Getty

At the same time, the global risk landscape is prompting some investors to reallocate capital away from traditionally dominant markets like the United States.

With increasing political volatility and fiscal uncertainty in the US, Australia’s relative political and economic stability is proving attractive.

American capital has led the charge, accounting for the largest share of offshore investment into Australia so far this year.

Currency movements are also likely contributing, with the Australian dollar trading low against the US dollar – even hitting a five-year low in April this year.

Adding to the momentum is the Australian government’s renewed focus on encouraging foreign investment.

From July 2024, Treasury began implementing reforms designed to streamline the Foreign Investment Review Board (FIRB) approval process.

Passive institutional investors and those with a strong track record of compliance are now eligible for faster decisions, particularly when investing in non-sensitive sectors like commercial real estate.

Other changes include refunds of application fees for unsuccessful competitive bids, and lower fees for investments in Build-to-Rent developments.

While total offshore investment volumes are still unlikely to reach pre-pandemic levels this year, the growing share of foreign capital in the market signals a clear return of confidence in Australian real estate.