Australian Commercial Property Indexes move into positive territory for the first time since 2022

The Royal Institution of Chartered Surveyors (RICS), has published its latest Global Commercial Property Monitor, showing a significant improvement in sentiment across Australia’s commercial property market in the second quarter of 2025 as all three key commercial property indexes move into positive territory for the first time since 2022.

The headline Commercial Property Sentiment Index (CPSI) moved to +9 in Q2, moving from -2 in the previous quarter. This is the first time the CPSI has been in positive territory since Q2 2022.

Similarly the Occupier Sentiment Index (OSI) moved to +7 in Q2 from -2 in Q1 returning the first positive reading since Q3 2022 and the Investor Sentiment Index reported a +10 reading from -1 in Q1 the first positive reading since Q1 2022.

Overall occupier demand continued its march into positive territory, with a net balance of +14 compared to +8 in Q1 2025. However, supply continues to outpace demand, with availability increasing by a net balance of +14, though this is slightly down from the +18 recorded in the previous quarter. Development activity continues to remain under pressure, with development starts showing a negative balance of -19, slipping slightly from the -18 recorded for Q1 2025.

Short-term rental expectations improved markedly this quarter, with a net balance of +23 anticipating rental growth over the next three months, up from +12 previously. This increase was led by a sharp increase in short term rental expectations for the industrial sector with a reading of +40 from +17 being recorded.

Over the 12-month horizon, sentiment is even more optimistic, with expectations continuing to rise to +26, compared to +21 in Q1.

Investment enquiries also continued to build momentum, with a net balance of +26 with respondents noting an increase in every commercial property category including retail. Notably, credit conditions have also improved sharply again, moving from +34 to +48 compared to a reading of 0 in Q4.

Vishant Narayan FRICS, Member of the RICS Australasian Regional Advisory Board:

"This quarter’s RICS Property Monitor shows strong positive sentiment across all commercial sectors, and particularly capital values and rental growth expectations. The optimism appears to reflect several factors including improved economic activity, softening interest rates and stabilising inflation.

"Importantly more than half the respondents now view the market as being in an upturn state.

"Anecdotal evidence of increased demand for professional services across the country, including technical, legal, and advisory, supports the report’s findings and suggests a clear lift in market confidence."