The geographic distribution of commercial property investment across Australia during 2024/25 revealed significant variations in market performance, with traditional powerhouse states maintaining their dominance while emerging markets showed notable resilience. While transaction values remained relatively uniform across most states, the reduction in transaction numbers reveals changing market dynamics and buyer behaviour patterns.
New South Wales continued its dominance of Australian commercial property investment, attracting $25.8 billion in transactions during 2024/25, representing 43.1 per cent of total national activity. Despite a modest 1.5 per cent increase in dollar volume, NSW experienced a 7.2 per cent decline in transaction numbers, indicating a flight to larger, institutional-grade assets. The state has been particularly favoured by offshore investors, with significant capital flows from North American and Asian sources targeting prime assets across all sectors. NSW's performance was underpinned by its position as Australia's financial capital, robust population growth, and diverse economic base that continues to attract both domestic and international capital.
Victoria recorded $13.4 billion in commercial property transactions, representing 22.3 per cent of national activity, though this represented a concerning 12.2 per cent decline in dollar volume and a substantial 27.7 per cent reduction in transaction numbers. The state demonstrated continued investor interest despite ongoing challenges in the office sector, though tax issues have created significant concern for buyers, reducing urgency and limiting commitment levels from both domestic and international investors. This has been particularly evident in the dramatic reduction in transaction volumes, suggesting many potential deals have been deferred or abandoned due to the challenging tax environment. Victoria's performance reflects however its strong population growth, diverse economy, and position as a key logistics hub for eastern Australia.
Queensland's commercial property market demonstrated solid momentum, with total transactions reaching $11.8 billion, representing 19.7 per cent of national activity and achieving a healthy 5.6 per cent increase in dollar volume. However, the state still experienced a 20.9 per cent decline in transaction numbers. The state reflected strong investor confidence in Queensland's economic prospects, driven by significant interstate migration, infrastructure investment, and resource sector strength. Private investors have been particularly active in Queensland's sub-$20 million market, while listed property groups and offshore capital have targeted larger opportunities, especially in the industrial and retail sectors.
South Australia emerged as the standout performer by percentage growth, recording $3.5 billion in commercial property transactions and achieving a remarkable 16.9 per cent increase in dollar volume, though still experiencing an 11.5 per cent decline in transaction numbers. This performance represents significantly improved investor confidence in the state's economic fundamentals and ongoing infrastructure development, with both domestic private investors and selective institutional capital driving activity.
Western Australia attracted $4.2 billion in commercial property investment, achieving a solid 5.0 per cent increase in dollar volume despite a 22.4 per cent reduction in transaction numbers. Perth accounted for the majority of this activity, with private investors particularly active in the industrial and retail sectors. WA's performance reflects the state's economic diversification beyond resources and growing appeal to investors.
The smaller jurisdictions of ACT, Tasmania, and Northern Territory all experienced declines in both dollar volume and transaction numbers, with Tasmania showing the most dramatic reduction in transaction count at 39.9 per cent. These markets reflected reduced investor interest and limited stock availability, though opportunities remain for investors seeking smaller-scale assets.
International investment flows showed clear geographic preferences, with offshore buyers demonstrating continued strong interest in NSW and Queensland, while showing more caution and less urgency toward Victoria due to tax considerations. These larger offshore transactions have contributed to upward pressure on asset pricing, particularly for institutional-grade properties in prime locations. Sydney remained the primary target for large-scale institutional investment, while Brisbane attracted growing interest from investors seeking growth opportunities. Regional markets across all states showed solid performance, with particular strength in areas benefiting from population growth and infrastructure investment.
The geographic distribution of investment activity demonstrates Australia's diverse commercial property landscape, with each state offering distinct opportunities reflecting local economic conditions, demographic trends, and infrastructure development. The uniform nature of dollar volume changes contrasted with dramatic reductions in transaction numbers indicates a fundamental shift in market participation, with smaller private investors jumping in price bracket while institutional capital has grown in activity. As we move into 2025/26, the combination of improving interest rate conditions, continued population growth, and Australia's political stability positions all states for potential growth, though the market may continue to favour larger transactions over smaller deals.
