RICS Global Commercial Property Monitor, Australia, Q1 2025

The Royal Institution of Chartered Surveyors (RICS), has published its latest Global Commercial Property Monitor, showing a gradual improvement in sentiment across Australia’s commercial property market in the first quarter of 2025, as rental expectations firm up and credit conditions ease.

The headline Commercial Property Sentiment Index (CPSI) edged up to -2 in Q1, improving slightly from -9 in the previous quarter. While still in negative territory, the result reflects a more stable outlook and growing confidence within the sector.

Occupier demand recorded an increase this time round, with a net balance of +9 compared to -1 in Q4 2024. However, supply continues to outpace demand, with availability increasing by a net balance of +18, though this is slightly down from the +27 recorded in the previous quarter. Development activity remains under pressure, with development starts showing a negative balance of -18, albeit improving from the -27 seen at the end of 2024.

Short-term rental expectations improved this quarter, with a net balance of +12 anticipating rental growth over the next three months, up from +5 previously. Over the 12-month horizon, sentiment is even more optimistic, with expectations rising to +21, compared to +3 in Q4.

Investment enquiries also picked up, with a net balance of +20 of respondents noting an increase, up fifteen points from the previous quarter. Notably, credit conditions have improved sharply, moving from a neutral reading of 0 in Q4 to +34 in Q, potentially supporting further activity in the months ahead.

Overall, while the Australian commercial property market remains in a delicate recovery phase, key indicators such as rent expectations, investor interest, and access to credit suggest growing momentum as 2025 progresses.

Kevin Brogan FRICS FAPI, Chair of the RICS Australasian Board

In Australia almost all indices showed marked improvements reflecting overall increased optimism in the market with equal numbers of respondents reporting that the Australian commercial property market is shifting towards an early upturn or is potentially still at the bottom of the cycle. This is a change from previous Monitors where sentiment indicated either that the market was at the bottom of the cycle or mid-down turn.

We are also seeing strongly performing categories such as high grade office and industrial properties continuing to return more positive readings and the retail category returning its march out of negative territory on key measures such as three month rental expectations.

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