Business Insights | Strengths and challenges of Australia’s property landscape in 2026

Whether you’re an investor, occupier or asset owner, a comprehensive look at the Australian real estate market's positioning moving into 2026 is crucial. And it’s exactly what CBRE’s Phil Rowland and Sameer Chopra presented in the final episode of Talking Property: The House View for 2025.    

The leaders dissected the global trends, emerging opportunities, and assessed the industry's key considerations to help commercial property stakeholders stay informed ahead of a new year of potential. 

Where there’s resilience and tailwinds 

The Australian real estate sector has demonstrated remarkable resilience over the past few years.  

"Real estate appears to have climbed this massive wall of worry," says Sameer, highlighting the challenges of higher interest rates, evolving office dynamics, and economic shifts.  

Despite these headwinds, capital values have remained near 2022 levels in residential, logistics, and retail. This resilience, coupled with strong population growth and significant infrastructure investment, positions Australian real estate favourably on the global stage. 

Phil further emphasised this shift in momentum of headwinds becoming tailwinds. Significant infrastructure projects, including airports, road tunnels, and rail lines, are acting as significant tailwinds for development.  

“Strong population growth is driving solid, long-term demand across office, logistics, retail, housing and the infrastructure investment that's supporting the backbone of development. This includes $100 billion per year that's been spent or allocated to city shaping infrastructure.” 

Additionally, with the expectation of further interest rate cuts, and the potential for increased investment from the substantial superannuation savings system, the local real estate sector is poised for growth in the coming year. 

Global view on US trends and the competitive landscape 

CBRE's analysis of the US market reveals a shift in investor sentiment. While multifamily and industrial sectors are favoured, retail is experiencing a resurgence, gaining share in global investment volumes. The US cap rate survey indicates stabilisation, and potentially compression, despite macroeconomic uncertainties. 

The Manhattan office market is also experiencing a strong comeback, with leasing activity significantly above the five-year average and decreasing vacancy rates. Tokyo's office market equally shows promising signs. This particular global landscape presents attractive opportunities.  

Logistics sees supply constraints and technological disruption 

Globally, the logistics sector is facing supply constraints, with completions dropping to levels last seen in 2017. This trend underscores the need for Australia to remain competitive and not become complacent about inbound capital flows, according to Sameer. Furthermore, technological advancements, particularly in robotics and AI, are poised to reshape warehouse design and operations. 

Confidence returns to debt and equity markets 

The equity market is witnessing increased capital partnerships as investor confidence rebounds. Australian assets are considered attractive due to capital and income growth, comparatively high cap rates, and reduced supply. On the debt side, increased competition among domestic banks is driving risk margins down, potentially benefitting borrowers. 

Occupier trends showing adaption of change 

CBRE’s occupier surveys reveal evolving trends in office and logistics. Office occupiers, particularly smaller companies, are generally meeting attendance expectations. Most occupiers expect to expand their footprint in the next three years. Location remains paramount for office tenants, according to Phil. 

In the logistics sector, Sameer also notes cost pressures, including transport, fuel, and labour, are driving portfolio reassessments. Most logistics occupiers anticipate expanding their footprint, prioritising modern facilities and sustainability considerations. 

AI’s impact on productivity and opportunity 

AI is poised to transform the property sector, though its impact on real estate requirements is not expected to be immediate. AI will likely allow for more productive operations, with the potential to drive job creation and evolution.  

“AI will have an impact, no doubt, but it'll also allow us to sort of move forward in a more productive manner,” explains Sameer. 

Tightening residential market alongside rental growth 

The residential market remains tight, with capital city vacancy rates projected to fall further. With population growth outpacing supply, the market is expected to see further rent increases by the end of the decade.  

“It's still a very tight market out there. We expect capital city vacancy will fall further. It could drop as low as 1.1% by 2030; it's about 1.8% right now,” says Sameer. 

Sector specifics and emerging trends 

• Data centres and living sectors: Significant growth opportunities exist, with an emphasis on strategic partnerships. 
• Graduate hiring: Firms are generally maintaining graduate hiring programs, emphasising the importance of future talent pipelines. 
• Retail space demand: Mixed-use developments, particularly apartments on shopping centre sites, are gaining momentum. 
• Apartment features: Internal laundry and car parking are the most desirable features in apartments. 
• First home buyers: The average age of first-time buyers is increasing, highlighting the need for more rental product. 
• International students: Culture and proximity to Asia are key drivers for international students choosing Australia.