How an additional 340,000 migrants will transform these Australian property sectors

Australia’s population is projected to reach 31.3 million people by 2034. But before then, an additional 340,000 people are expected to call this country home by June 2025. 

How will this affect the nation’s real estate?  

“This is likely to drive significant demand for it,” says Sameer Chopra, CBRE’s Pacific Head of Research, who led the most recent findings from this year’s Pacific Market Outlook report. 

"The 2.4 million growth over 2022 to 2027 is akin to recreating Brisbane, Australia's third largest city. Think about all the real estate in Brisbane - residential, retail, logistics, offices, hotels, hospitals and childcare.” 

Given this outlook, it’s crucial to identify the specific property sectors and economic centres that Australia’s population growth is expected to impact the most. 

Here’s where CBRE’s leading property experts see opportunities alongside proactive strategies for private and public investors, occupiers and developers. 

Rise of living sector alternatives 

Australia’s ongoing housing crisis will be put under further spotlight as the population grows.  

“Australia’s long-term population growth rate will remain amongst the strongest in the developed world at circa 1.2% per annum,” explains Craig Godber, CBRE’s Head of Residential Research for Australia. 

“The ongoing demand for dwellings comes at a time when new supply is trending at decade-plus lows, and despite best intentions, there is little prospect of the public sector’s target of 240,000 homes per annum through to 2029 being met. That target is almost 25% higher than the decade average and has never historically been achieved.”   

Based on current project feasibility impediments, supply pipelines will continue to be constrained for most of the remaining decade, particularly for higher density products.  

In the medium term, rental markets will remain strained with tight vacancy and rental uplift continuing - albeit at a more sustainable rate than the record growth seen in the recent cycle. 

“When coupled with changing demographics, this should support further evolution of living sector alternatives including build to rent (BTR), single family rental, purpose-built student accommodation (PBSA), retirement and land lease,” says Craig.   

“The supply versus demand imbalance suggests that a pricing floor exists, limiting the likelihood of any significant broad-based long-term negative price adjustment, especially with the prospects of a more modest interest rate cycle looming.”  

Retail diversification to meet new demand 

Australia's increasing population is geared to drastically transform the retail landscape, presenting both challenges and opportunities for investors, occupiers, and developers. 

“Increased population with migration to CBD and regional areas of Australia will see retail operators adapt by diversifying their offerings and expansion of their brands,” explains Sheree Griff, CBRE’s Pacific Head of Retail Property Management & Leasing. 

Growth and repositioning of the Large Format Retail (LFR) asset into a lifestyle asset will also become more evident. LFR is evolving due to the daily needs and retailer demand for market share in locations that are increasing in population. Its limited supply will also help drive this evolution. 

With planning legislation differing in each state, co-operation between investors, government bodies and tenants is crucial to ensuring retail assets can evolve with population growth.  

“The emerging trend of mixed-use precincts is no longer just for our CBDs; we will see existing regional shopping centres emerge into large community town halls that will essentially never close,” says Sheree.  

Think the integration of residential, childcare, wellness, hospitals, office, daily needs retail, entertainment, and research facilities - a shift based on the evolving demands of consumers while capitalising on the increasing cost of living where residents seek convenience and accessibility in their daily needs experiences. 

“With rising construction costs unlikely to decrease in the near future, investors will need to focus on strategic reinvestment in existing retail assets to enhance their performance,” Sheree adds. 

“While new developments may face financial hurdles, capital interest in Australia remains robust, encouraging a reimagining of retail strategies.  

“Retailers are anticipated to intensify their brand strategies while emphasising experiential shopping to attract consumers in a very competitive environment. This evolution in the retail sector underscores the necessity for stakeholders to adapt their plans and strategies, ensuring they meet the changing needs of a growing population while remaining competitive in a dynamic market.” 

Overseas investment eyeing the local office market 

The office sector may have experienced past headwinds, but that trend appears to be changing. Market Outlook findings reveal that return-to-work has continued to gain momentum across Australia with scope for further improvement in 2025. This is accompanied by data showing that vacancy in offices commanding premium rents is just 5.5%. 

“Whilst our population continues to grow, so does the demand for office space in our capital cities given the appeal from local and global organisations,” explains Tim Courtnall, CBRE Pacific’s Head of Office Investor Leasing. 

“I’ve always been a big believer that Australia will continue to attract investment from overseas which will support our local office markets, especially given the attractiveness for skilled workers to migrate or return from locations such as Asia and Europe.  

“With the incoming Olympics, continuing reliance on natural resources, lifestyle benefits, political stability and advancing technology platforms, Australia is well positioned to take advantage of a once in a 100-year opportunity over the next decade.” 

Hotels around transport and infrastructure  

CBRE calculations show that for every 1 million growth in population, an additional 11,500 hotel rooms are required. 

“Australia’s booming population will see significant growth in the hotel sector, increasing demand across leisure and corporate travel,” says CBRE’s Head of Hotels Research, Ally Gibson. 

“Larger cities and regional hubs will experience heightened demand as population growth drives domestic tourism, boosts international arrivals, and stimulates new business opportunities.” 

Key markets including Sydney, Melbourne, Brisbane and Perth are all well positioned for significant growth, as key infrastructure investments enable these cities to meet rising demand. Projects such as Sydney’s Western Sydney Airport, Melbourne’s Metro expansion, Brisbane’s $6 billion infrastructure investment for the Olympics and Perth’s $2 billion airport upgrade are all driving connectivity and accessibility.  

The key considerations for developers and investors?  

“Invest in hotels near major transport and infrastructure projects to meet rising accessibility needs. Compelling mixed-use developments and sustainable focused investments will also assist in future proofing assets.”   

Potential of integrated health precincts 

Hospitals are the backbone of every healthcare system and according to Sandro Peluso, CBRE’s Director of Healthcare & Social Infrastructure, this surge in population will significantly impact Australia’s hospital sector, increasing demand for both public and private healthcare services. 

“Hospitals will need to expand their capacity, upgrade facilities, and invest in advanced medical technologies to cater to the rising number of patients. 

“Private investors and developers should focus on creating integrated health precincts that combine healthcare delivery, research, education, and accommodation, as these clusters drive higher rental and land/building values,” he says.  

“Public-private partnerships can also be beneficial, leveraging government backing and long-term leases to ensure stability and profitability. Additionally, addressing the needs of an aging population and the increasing burden of chronic diseases will be crucial for sustainable growth in the sector.”