Commercial property

Demand for Australian real estate

Factors such as population growth, infrastructure investment and job growth are expected to drive demand for commercial property in the coming decade.

The report ‘Demand for Real Estate’, prepared by CBRE explores these factors in detail, discussing what they mean for our country’s future property supply and rental outlook. Here’s a summary of key highlights from the report.

Australia’s population and income boom

Did you know, Australia is likely to experience one of the fastest population growth rates of OECD countries over 2023-2033?

As the population grows, so does the need for commercial real estate. CBRE estimate that for every 1 million new Australians, incremental real estate demand is:

Logistics: 4,500,00 sqm
Office: 800,000 sqm
Residential: 420,000 apartments and houses
Retail: 800,000 sqm
Hotels: 11,500 hotel rooms
Hospitals: ~3,300 hospital beds.

Evolving job growth

Australia has added a staggering 1.6 million jobs over the past five years to May 2024.

The growth has been 25% faster than the previous 5-year period over 2015-2020. This is remarkable considering the economy was “locked down” over 2020-21 and more recently has faced a period of constrained monetary policy (high interest rates).

Agriculture real estate – the food economy

Have you heard that agriculture contributes approx. $85 billion of production value to the Australian economy?

The demand for agricultural real estate has been underpinned by increasing domestic spend on food, Australia’s role in global food trade and productivity benefits from corporatisation of farms. These demand drivers are also playing a role across Australia’s key export markets in Asia!

Riding the infrastructure wave

According to the ABS and CBRE research, real estate which is well located to benefit from Government infrastructure spend should experience out-sized income and capital growth.

Future supply

Australia’s commercial real estate supply is likely to be restricted over the next five years. Current high construction costs, high cost of finance, infrastructure bottlenecks and regulatory hurdles make development challenging.

Rent outlook

Good news for Australia’s commercial rental outlook – tight vacancies have already contributed to a material uplift in rents for residential and logistics. Looking ahead, CBRE forecast office and retail could see face rent growth and incentives stabilise/reduce in most geographies.