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Australian industrial property continues to lead commercial real estate performance, but artificial intelligence is poised to fundamentally transform which assets remain competitive, according to Ray White. Industrial property delivered total returns of 8.6 per cent in December 2025, with capital growth of 4.1 per cent, the strongest of any major asset class.
"Industrial was Australia's most-traded asset class in 2025, with $29.58 billion changing hands across the year, up 44.9 per cent from 2024, accounting for 36.8 per cent of all national commercial property activity," Ray White said.
Average transaction sizes have grown to $6.01 million as buyers recognise existing stock carries genuine scarcity value, with Brisbane nearly doubling its volumes to $7.84 billion while Sydney remained the dominant market.
"The depth and consistency of this activity, drawing institutional capital from Canada, Singapore and the United States alongside domestic super funds and REITs, reflects a market that global investors continue to regard as fundamentally undersupplied," Ray White said.
AI driving operational transformation
Ray White said artificial intelligence is rapidly moving from a back-office tool to the engine room of modern warehouse and logistics operations. "Automated storage and retrieval systems, autonomous mobile robots and AI-powered inventory management are becoming standard fitout in the most sought-after facilities globally," Ray White said.
The warehouse automation market in the United States is projected to more than double from US$25 billion in 2024 to over US$54 billion by 2029, with Amazon targeting 30 to 40 per cent automated order fulfilment by 2030. "Australia is well positioned to benefit from these trends. The country's persistent labour cost challenges and the concentration of e-commerce and logistics activity along major metropolitan fringe corridors create the same economic incentives for automation," Ray White said. The transport, postal and warehousing sector recorded 5.1 per cent business growth in the year to June 2025, among the fastest growing industries in the country.
Supply constraints intensify pressure
The NSW Government's Employment Lands Development Monitor reveals the severity of supply constraints in Sydney. "Of the 20,210 hectares of zoned employment land across Greater Sydney, just 631 hectares of undeveloped land has access to water and sewer connections, representing less than nine per cent of all undeveloped stock," Ray White said.
Almost all of this sits in Western Sydney, concentrated around the Aerotropolis precinct. "For the vast majority of established Sydney industrial markets, developable land is effectively exhausted. As the logistics industry moves toward AI-driven automation that demands larger, more technically specified facilities, the land capable of accommodating those buildings is further from the city than ever," Ray White said.
New specifications creating market divide
AI-enabled automation systems require substantially greater power capacity than conventional warehousing, along with high-bandwidth data infrastructure, enhanced temperature control and redundant power supply. "Assets that could meet these requirements will likely command premium rents and attract the strongest tenants. Those that cannot face growing obsolescence pressure," Ray White said.
Ray White said the relationship between AI and overall demand for industrial space is complex, with smarter supply chains driving e-commerce growth while efficient inventory management could reduce total footprint requirements. "The net effect on aggregate demand is uncertain, but we're seeing movement toward well-specified, technology-capable assets in locations with strong logistics connectivity, and away from ageing secondary stock," Ray White said.
"For investors, the near-term picture for industrial property remains among the most attractive in the commercial sector, but the medium-term opportunity lies in understanding which assets are positioned to meet tomorrow's occupier requirements."
Commercial property markets have returned to positive capital growth after two years of adjustment, with national all-property returns reaching 7.4 per cent for the quarter ending December 2025. Ray White Group, Head of Research, Vanessa Rader said the return of positive capital growth at 2.0 per cent marks a shift from the correction phase that dominated recent years. "The December 2025 data represents more than incremental improvement, it marks the transition from yield adjustment to capital growth," Ms Rader said.
Retail sector leads market recovery
The retail sector continues its leadership position, delivering total returns of 9.2 per cent driven by capital growth of 3.0 per cent alongside income returns of 6.0 per cent. Sub-regional centres lead the sector at 10.9 per cent total returns with capital growth of 3.9 per cent, while regional centres recorded 10.5 per cent returns. "The consistency of performance across all retail subcategories indicates the sector's structural recovery is broad-based rather than concentrated in specific property types," Ms Rader said.
Industrial maintains strong performance
Industrial assets recorded total returns of 8.6 per cent, with capital growth strengthening to 4.1 per cent alongside income returns of 4.3 per cent. "Queensland industrial led with total returns of 10.8 per cent and capital growth of 5.7 per cent, driven by population influx and expanding logistics requirements," Ms Rader said. "Western Australia industrial posted exceptional returns of 10.0 per cent with capital growth of 4.2 per cent, reflecting resource sector strength and supply constraints that continue to attract east coast investors."
Office markets show regional variations
Office markets remain under pressure from structural challenges, though notable regional variations reveal how fundamentals are driving dramatically different outcomes, Ms Rader said.
Total returns reached 5.9 per cent nationally, but capital growth remained subdued at just 0.4 per cent. "Brisbane CBD office delivered the strongest performance with total returns of 10.6 per cent, driven by capital growth of 4.4 per cent," Ms Rader said. "The combination of vacancy below 11 per cent, pre-committed Olympic infrastructure activity, and limited new supply continues to support valuations in the Queensland capital."
She said Melbourne CBD office remains the notable underperformer with total returns of just 3.8 per cent and capital growth declining by 1.6 per cent. "Melbourne represents the clearest example of how vacancy and oversupply dynamics directly impact capital values," Ms Rader said.
Quality assets outperform
Ms Rader said the return to positive capital growth validates the strategic positioning that many investors adopted during the downturn. "Those who acquired quality assets at expanded cap rates are now seeing both strong income yields and emerging capital growth," she said. "However, capital growth isn't returning uniformly across all assets. The data clearly demonstrates quality and positioning matter more than ever, with premium assets in strong sectors achieving meaningful capital appreciation while secondary assets in challenged sectors continue facing value pressure."
She said that despite upward inflationary pressures on interest rates seen in 2026 potentially dampening urgency in the marketplace, capitalisation rates are likely to remain in their holding pattern. "For investors seeking to position portfolios for the next growth phase, understanding which specific markets and property types are leading capital growth will likely be critical to generating superior returns," Ms Rader said.
Why buy?
Many businesses will require the use of a vehicle for their daily operations. One of the first questions a business owner will need to ask is: Should I buy or lease the vehicle?
The main reason a business would buy a car is so that they own the asset. This has the added benefit of tax deductions that could make it an attractive option. Typically, you can claim things like fuel and repairs and maintenance for operating the vehicle.
Your interest payments and depreciation – which can be significant – can also potentially be claimed as a tax deduction. A car that is owned by you would also allow you to find better rates on insurance, which can end up saving a considerable amount of money.
Another consideration is how much you will need to initially put down to purchase the vehicle with finance. Normally, to achieve lower interest rates, a lender will want to see a percentage of the car's value as a down payment to reduce their risk.
Why lease?
The second option for a business is to look at leasing a vehicle for the company. The main reason a business owner might consider leasing is the cost of a lease can be lower than the cost to finance a car and make repayments. However, there are other options that can help you reduce your repayments when financing a car – such as a balloon payment – that can lower your monthly costs.
When you lease a car, you never actually own the asset and are also not required to cover the ongoing costs of maintenance and servicing. However, there may be costs associated with driving more kilometres than your lease allows, which would result in additional expenses.
Typically, leasing might be cheaper on a monthly basis, but in the long run, you’ll end up paying far more while not owning the asset. It's also worth considering what the upfront costs might look like. While a lender would likely want to see a deposit put down to secure a better interest rate, there could be fees associated with leasing the car that also need to be paid upfront.
When deciding if you’d like to lease or buy, there are a host of tax considerations that you need to take into account. These should be discussed with your accountant before making any decisions. While cash flow is important to all businesses, it’s equally important to do a side-by-side analysis of leasing versus purchasing with finance to determine which option is the most cost-effective for you. With anything in finance, it’s important that you speak to the right professionals to help you make the best decision for you and your business.
Attending open homes is often one of the most exciting parts of the property search. After browsing listings online and narrowing down your options, stepping inside a property could help you get a much better sense of whether it might suit your needs. However, inspections could move quickly, and it’s easy to get caught up in presentation, styling and first impressions. Taking a few moments to look beyond the surface could help buyers build a clearer picture of the property.
Here are four things worth paying attention to when attending an open home.
Look beyond the presentation
Many properties are styled carefully before inspections to make them look as appealing as possible. Fresh paint, furniture styling and lighting could all help create a strong first impression.
While presentation could help showcase a property’s potential, it’s important to look beyond cosmetic features and consider the fundamentals of the home. This might include the layout, room sizes, storage space and overall functionality of the property. Thinking about how the home would work without the styling could help buyers better assess whether it suits their needs.
Pay attention to the property’s condition
During an inspection, it could be helpful to look for signs of wear or maintenance that may not be immediately obvious. Things such as cracks in walls, signs of water damage, ageing fixtures or uneven flooring may indicate areas that could require attention in the future.
While some maintenance is normal for any property, noticing potential issues early could help buyers understand what may be involved after purchase. Some buyers also choose to arrange building and pest inspections later in the process to gain a more detailed assessment of the property.
Consider the surrounding environment
An open home provides a valuable opportunity to observe not just the property itself, but also the surrounding area. You may want to take note of factors such as street noise, traffic levels, neighbouring properties and general activity in the area.
Parking availability, nearby amenities and the overall feel of the neighbourhood could also influence how the property fits your lifestyle. Walking around the street before or after the inspection could often provide additional insights.
Think about your finance position
If you find a property that feels like the right fit, the next step often involves understanding whether it aligns with your borrowing capacity. Having a clear understanding of your finance position could help you move more confidently if you decide to make an offer.
Speaking to IFinance Australia could help you compare your options so you’re prepared should you want to make an offer.
Australians are increasingly moving from traditional family homes into luxury apartments, driving a boom in the prestige apartment market. McGrath Research data reveals that the number of prestige apartments sold in 2025 has tripled over the past decade, signalling a sustained shift in buyer preferences toward high-end apartment living.
McGrath CEO John McGrath said the prestige apartment segment has been the strongest performer in recent years. "Prestige apartments have been the strongest market segment in the last few years as high-net-worth individuals choose luxury, security and lifestyle in apartments over houses," Mr McGrath said. "Demand has increased dramatically as luxury apartments have gone to a whole new level in design, finishes and amenities."
Queensland has emerged as the leader in this market shift, accounting for 43 per cent of East Coast prestige apartment sales in 2025. NSW followed with 41 per cent, while Victoria captured 16 per cent of the market. Mr McGrath said Southeast Queensland has become particularly attractive for luxury apartment buyers. "Southeast Queensland has become the favoured location for many looking for luxury apartment living as pristine beaches and rivers become perfect backdrops for beautiful buildings," he said. "The strongest demand has been for prime locations with easy access to major cities as most buyers in these apartments are still living very active and vibrant lives."
Price growth has been substantial across all major markets. Over the past five years, new prestige apartments have significantly outperformed established units, rising 88 per cent on the Gold Coast, 60 per cent in Brisbane, 34 per cent in Sydney, and 32 per cent in Melbourne. Analysts attribute this growth to larger floor plans, premium amenities, superior materials, and a historically low supply of new luxury apartments relative to Australia's growing wealthy population.
Michelle Ciesielski, McGrath's National Head of Research, said the industry identified the rightsizing trend early and adapted accordingly. "After identifying the emerging rightsizing trend in Australia back in 2020, there has been more than double the delivery of apartments with three or more bedrooms, and the average apartment built was one-third larger," Ms Ciesielski said.
By 2028, 40 per cent of apartments in prime regions of Melbourne and Brisbane will likely feature more than three bedrooms, with 34 per cent on the Gold Coast and 31 per cent in Sydney.
Car parking has become a significant value driver. Sydney commands a 62 per cent price premium for three-bedroom apartments with more than four car spaces compared to just one, while Brisbane shows a 47 per cent premium, Gold Coast 46 per cent, and Melbourne 41 per cent.
More than two-thirds of buildings across Sydney, Melbourne, and Brisbane CBDs now feature pools and gyms as standard inclusions. "Many rightsizers are seasoned global travellers, shaping their expectations for amenities in their new home based on luxury hotel experiences. Australia has a long way to go and developers might consider get this balance right given the more competitive marketplace," Ms Ciesielski said.
Despite strong demand, the cost of delivering premium apartments remains elevated due to rising material prices and a shortage of skilled labour. "High-net-worth demand for luxury downsizing remains strong, although purchase price and ongoing costs will likely be a decisive factor when giving up the space of a family home," Ms Ciesielski said. "Our study found that prestige apartments generally incur lower upkeep costs compared to similar quality standalone houses, when sinking funds are appropriately managed."
There are few bigger milestones in life than the purchase of your first home. While it is certainly an exciting process there are a number of considerations you’ll need to take into account before you can begin your journey. Most first home buyers will be looking at using finance to buy a property, and with that comes some important factors that they’ll need to check off.
Work out your budget
When purchasing a home you need two things – a deposit and the ability to borrow money from a lender. For first home buyers, the biggest hurdle is often getting a deposit together. While most people assume you need to come up with a 20 per cent deposit, for first-time buyers, there are a range of options that can help you get started sooner.
While lenders will want you to typically have some genuine savings together, there are programs in place that can help you get a loan with as little as a 5 per cent deposit. The Federal Government’s First Home Loan Deposit Scheme (FHLDS) allows first home buyers to put down just five per cent. With this loan product, the Government will effectively guarantee the loan, helping first home buyers avoid Lender’s Mortgage Insurance.
It’s also possible to get the help of your family with a guarantor loan. This works in a similar fashion to the FHLDS, in that your family member will use the equity in their home to guarantee that deposit amount and avoid LMI.
Get pre-approved
A good idea for a first home buyer is to start having a conversation with their mortgage broker very early on in the process and discuss getting a preapproval.
A pre-approval is a conditional loan approval that gives borrowers an indication they can potentially get finance, assuming their chosen property meets certain criteria. While it’s not a guarantee, it is very helpful as it gives the borrower clarity around exactly what they are able to borrow. It also makes sure they’ve got all their financials and documentation together.
This will help when the time comes to make an offer or bid at auction, as the buyer has a very clear understanding of what they’re able to pay and how that is going to impact their monthly spending habits.
Understand additional costs
When buying a property there are normally a lot more costs than just the purchase price of the home. First home buyers can sometimes make the mistake of not budgeting appropriately for all the additional expenses that can come up early on.
The main cost for most buyers is normally stamp duty, however, a first home buyer can be exempt based on their circumstances and the purchase price of the property. Similarly, a first home buyer can avoid LMI if they are able to qualify for one of the previously mentioned loan programs.
However, there are other costs that will be required to pay upfront, including building and pest inspections and conveyancing costs. When you settle on the property, you’ll also have to pay for things like your share of the rates, strata fees, water, as well as insurance.
Being aware of what costs are likely to be involved before making an offer will put you in the best position to budget and move into your new home without any financial stress.
Adding appliances
Depending on where your investment property is located, the addition of a few different appliances can make a property incredibly appealing. Something as simple and relatively inexpensive as a dishwasher makes a property far more in demand than one without.
The same is also true for air conditioning. If you live somewhere in Australia with relatively hot summers, air conditioning is almost a must. You don’t need to go all the way with a large ducted system – a modest reverse cycle unit will suffice in most instances and is a good way to get a slightly higher weekly rent.
Another idea for smaller apartments is to have a built-in washer/dryer unit. Many older apartments don’t have space for a washing machine, let alone a laundry. People appreciate the added convenience of having a laundry ready to go.
Timing of your lease
Just like when you’re selling a property, when you put a property on the market to rent is equally as important. Typically, the summer months are when there is the most demand for rental properties. If your goal is to maximise your rental income, then you should look to find new tenants when there are the most people looking.
While you can’t control something like a tenant leaving, you don’t always have to go with a standard 6 or 12-month lease. You can stagger the lease so that it comes out of its tenancy during summer to give yourself the best opportunity to attract a solid tenant and obtain a good price.
Renovations
While most people understand that a renovation can add overall property value, it can also improve rental yield. The most obvious place to start with any renovation is the kitchen and bathroom, but depending on your budget, that might not be viable.
In terms of value for money, floor coverings, window coverings and a coat of paint can be a cost-effective way to really improve the presentation of your property and potentially make it more attractive to would-be tenants. With house prices drifting higher to start the new year, trying to afford your dream home is getting harder. Fortunately, there are a number of things you can do to maximise your borrowing capacity without needing to increase your income.
Start budgeting
When lenders assess your borrowing capacity, they look closely at your fixed expenses as well as monthly living expenses. While it might not be easy to reduce all your costs, it’s worth examining some of your ongoing expenses that you can potentially trim. Subscriptions and memberships can easily stack up, as well as other non-essential costs. If you’re looking at buying a property, it might be worth sacrificing a few luxury items in the short term to make that happen.
Consolidate debt
These days, people often buy things on credit. The main issue with this is that purchases with something like a credit card often attract high interest rates. Things like car loans, personal loans and credit cards can really dent your borrowing capacity. It’s worth looking at consolidating your debts and rolling them over to a lower interest rate loan product. This will free up some serviceability. It could also be worth getting rid of your credit cards if you don’t really need them, as lenders assess these as if they are maxed out – regardless of how you use them.
Watch your credit score
Your credit score is like a track record of how you have managed credit in the past. If you’ve got a history of not paying your bills on time, then a lender will likely want to apply a higher interest rate to any loan you take out. This in turn, means you will be able to borrow less money. The good news is that you can start to repair your credit and lift your credit score. Simply paying your bills as soon as you receive them and staying on top of your credit card will help accomplish this. By always paying bills on time, you’re showing that you can manage money, which will mean lenders are more likely to want to work with you.
Choose the right home loan product
Depending on the loan features you need and the type of home loan product you want, your interest rate will vary. If borrowing capacity is an issue, it’s worth talking to your broker so they can compare home loan products and you can work towards your goals.
A mortgage broker should always be the first person you speak to, as they can assess all of your personal requirements and compare loan products that will suit your needs.
Lifestyle inflation is that phenomenon of any additional income being absorbed, without you even realising.
Maybe you’ve been working hard, climbing that corporate ladder. Or perhaps you’ve just received a massive tax return, or your side hustle is starting to take off.⠀⠀⠀⠀⠀⠀⠀⠀
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Your income is healthier than ever, yet it’s not as though you’re saving, investing, or donating more.
Where has it gone? ⠀⠀⠀⠀⠀⠀⠀
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Think gym memberships that never get used, additional streaming services that aren’t needed, more meals out (ok, takeaway).
The antidote? A budget!
We promise it’s not as boring as it sounds. In fact, what’s boring is having too much month at the end of your money and having to say ‘No’ to your social life.
Get in touch to find out how to better manage your money.
As if keeping track of the property market wasn’t a full-time job in itself! When you buy a property, it’s more than just the advertised price you’ll need to factor into your plans.
Home loan application fees
There’s no such thing as a free lunch, and many lenders charge you a fee for the privilege of applying for a home loan.
Part of their rationale is presumably to cover the costs of processing your application, as well as it acting as a deterrent from applying with multiple lenders (which would impact your credit rating). An application fee covers:
But wait, there’s more!
…And there’s still more!
If you want help applying for finance, get in touch with us today.
There’s been talk in recent years about the fact Australia will soon face the largest intergenerational wealth transfer in history.
What exactly is an intergenerational wealth transfer? Well, it’s a euphemism for the inheritance you stand to receive when your parents leave this mortal coil. Specifically, it’s the $3.5 trillion that the X & Y Generations will inherit over the next 20 years. According to Griffith University researchers, each recipient will inherit an average of $320,000.⠀⠀⠀⠀⠀
Seems a bit morbid, doesn’t it? But that might be the problem – no one wants to talk about it. Over half of Aussies don’t have a will, yet hope that their children will invest their inheritance wisely.⠀⠀
Building intergenerational wealth isn’t just for the elite. But unfortunately, the average Joe isn’t necessarily setup to maintain and grow any wealth they inherit. In fact, it’s estimated that 70% of families will lose their wealth by the second generation, and 90% will lose it by the third.
So, this week, perhaps broach the subject with your parents. Do they have a plan in place for passing the baton, and what do they hope for their financial legacy?
Get in touch if you’d like our suggestions for ethical, experienced financial advisers or lawyers – we have several in our network we’d be happy to introduce you to.
Who remembers receiving $20 in a birthday card from a relative? Or maybe it was $5 or $10, depending on how far back we’re talking.
And whether you’d already spent it in the time it takes to receive an extra-long hug from THAT Aunty, or you’d deposited it straight into your savings account with THAT bank, or you’d invested it into your latest and greatest money-making venture – there’s a good chance that those same money habits are with you today.
If you’re thinking about gifting some cold, hard cash to the little ones in your life, then have a think about how you can help them develop a good relationship with money, because as we all know: old habits die hard.
Giving cash is probably more useful than ever in today’s increasingly cashless society, because it gives kids a more tangible insight into how money works.
Here are five ways to help children think about money:
Note: We’re not saying there’s a right or wrong way when it comes to someone’s money mindset, but we’re big believers that knowledge is power.
Tell them about the money jar concept, where they’d portion out their money into key categories: save, spend, invest, donate, and then have to decide upfront how much they want to devote to each. Using physical jars helps kids understand an otherwise abstract idea. When they’re making decisions about where to send their money, they can see that they’ve only got their allocated funds to work with, and so it helps them learn to be more disciplined and purposeful with their decision-making.
Talk about opportunity cost, so when they’re deciding on whether to buy something, highlight what they’d be missing out on. Little Ryan wants to go on that $20 ride again? Remind him he won’t have money left to buy the showbag. Sounds a bit like being Fun Police, doesn’t it? But before long they’ll be pre-empting you and considering the opportunity cost before you’ve had a chance to prompt them.
Talk about the difference between good debt (debt that allows you to invest in wealth-building channels like property), and bad debt (debt that costs you). For example, if they ask for a $50 loan, charge them (a nominal amount of) interest. Get them thinking about whether they want to pay compound interest, or earn it.
If you’re living a comfortable life, kids can get the impression that money grows on trees, right? Think about letting your kids know how much money you earn, and what’s involved (i.e. the long hours, years of education and training). Of course, you may want to tell them not to bring it up at Christmas lunch – we’re not necessarily suggesting you become that transparent!
Setting up a very modest portfolio can be an incredible way to introduce children to the concept of trading shares. With the various apps around these days, the barriers to entry are not what they once were, and trading shares certainly isn’t just for trust fund babies. Make sure you speak to your accountant and/or financial adviser for guidance around the capital gains benefits.
