CRE transactions roar back with a vengeance

OFFSHORE investors, domestic institutions and private capital are underpinning surging commercial investment, with $18.7 billion in sales tallied up in 2024 so far.

According to JLL’s preliminary figures, Australian commercial transaction volumes in Q3 hit $6.2 billion, up 40% from transaction in the same quarter last year.

While volumes for the first nine months of 2024 hit $18.7 billion, or a 48% increase from the same period in 2023.

The industrial sector led sales volumes for the quarter at $2.2 billion, with the office sector following at $2.1 billion and the retail sector at $1.9 billion.

“Momentum is clearly building across commercial property sectors and the office sector has been a major beneficiary. As we expected to see at the beginning of 2024, this reflects a higher conviction in the market and greater clarity with pricing,” said Luke Billiau, head of capital markets, Australia at JLL.

“We believe the market is on track to record around AUD 28 billion for full year sales volumes, based on the activity in the first nine months and with Q4 traditionally the strongest sales quarter. This would see the full year volumes round out just below the 10-year average of AUD 31 billion and signals the market is rebounding.”

For the first nine months of the year, the industrial sector recorded $8.3 billion, up 66% from $5.0 billion in the same period in 2023.

With the largest industrial transaction was Aware Super and Barings acquisition of Austrak Business Park, 5-161 Hume Highway, Melbourne for $600 million from GPT Group and Austrak.

The office sector recorded $6.1 billion in transactions, up 61% on the $3.8 billion record in the same period last year.

Foreign investors were responsible for two of the top three office transactions over the quarter, with the German Deka’s acquisition of 333 George Street for $395 million and Hong Kong’s PAG acquisition of 367 Collins Street for $315 million.

While the most significant office transaction was Billbergia Group’s circa $500 million purchase of the 338 Pitt Street development site in the Sydney CBD.

While the retail sector took in $4.3 billion, up 12% from the $3.9 billion the first three quarters of 2023.

With Vicinity Centres acquiring Lakeside Joondalup (50%) in Perth from the Future Fund for $420 million.

“While we’re close to the trough in valuations, the 50 basis point cut by the Federal Reserve is a positive step in the right direction that instils more confidence into real estate investors decision making, and adds to a number of other countries which have also commenced the monetary policy easing cycle,” added Billiau.

“While Australia is likely to be more delayed than some global counterparts our official cash rate has peaked at a lower level (4.35%) and the futures market pricing currently suggests around 125 basis points of RBA cash rate cuts by February 2026 to 3.1%.”