Retail emerges as Australia’s star property performer as overall sales activity declines

Investors turned bullish on Australia’s retail sector in 2025, pushing transaction volumes 20% higher y-o-y to $11.3 billion, new CBRE figures show.

Retail was by far the favoured sector, with CBRE’s preliminary 2025 data pointing to a 7% decline in overall transaction volumes to $33.6 billion – reversing the growth observed in 2024.

CBRE’s Australian Head of Capital Markets Research Tom Broderick noted, “Sentiment improved in early 2025 as the cash rate was cut by 75bps, which led to higher volumes. However, the second half of 2025 underperformed the previous year, as higher than expected inflation data started to push bond rates and the interest rate outlook higher.”

While retail bucked the trend, industrial & logistics (I&L) sales dipped 5% to $9 billion, office transactions dropped 16% to $9 billion and living sales declined 36% to $3.1 billion.

CBRE’s Pacific Head of Capital Markets Flint Davidson noted, “The repricing of the sector coupled with a limited future supply pipeline has made investors bullish on the future growth prospects of retail assets, pushing sales activity to the highest level since 2021. The I&L sector also remains a key target for capital allocations, despite the small transaction decline in 2025.”

Mr Davidson linked the drop in office sales to less stock being traded in Sydney compared to last year and said the decline in living transactions was partly due to fewer portfolio deals and the lack of built form product for sale, with most trades involving fund-through development deals.

On a positive note, CBRE’s data highlights that the total offshore capital invested in 2025 reached $9.3 billion, 12% higher than the previous year.

“Australia remains a key destination for capital in the APAC region, given the country’s stability and market transparency. North American capital led the charge, injecting $3.9 billion, supported by a weaker Australian dollar and a push for global portfolio diversification. Japanese investors maintained strong interest, particularly in development projects, allocating $2.3 billion over the year, while Singapore rebounded after a subdued period, lifting investment to $1.6 billion in 2025,” Mr Broderick said.

Looking forward, Mr Davidson said the expectation was for increased volumes across most sectors in 2026 underpinned by more structured transactions, such as joint ventures, recaps and possibly some M&A activity.

“We anticipate a strong start to Q1, with a significant number of current live trades expected to settle in the New Year,” Mr Davidson said.

“Foreign capital will continue to play a major part in the market across all sectors and we’re likely to see more interest in locations such as Brisbane, Perth, Adelaide and Canberra. But don't discount the domestic groups in 2026 in terms of their ability and capacity to raise capital and compete with offshore investors.”