Commercial property investors heading north

Commercial property investment has shifted decisively north, with Queensland emerging as one of Australia’s most sought-after destinations for investors.

Strong population growth and attractive yields are supporting demand for commercial property across Queensland, with sales up over the past 12 months, despite restrictive interest rate settings.

The upcoming Olympics in 2032 could also be feeding into demand, with the Games expected to raise Brisbane’s profile globally and accelerate infrastructure investment that should benefit the city over the longer term.

Beyond Brisbane, more investment is also flowing into regional Queensland. According to MSCI Real Capital Analytics, purchases of commercial property in regional Queensland reached their second highest level on record in the June 2026 quarter.

The only stronger quarter for regional Queensland occurred in December 2021, when commercial property markets were buoyed around the country by record low interest rates and the post-pandemic recovery.

The strength of this rebound, despite elevated funding costs, underscores the growing confidence investors have in Queensland’s commercial property sector.

2026 is shaping up to be a strong one in terms of transaction volume. Source: realcommercial.com.au Commercial Property Update

One of the key drivers underpinning this confidence has been Queensland’s exceptional population growth, with the state adding over half a million more residents to its population over just the past five years.

Overseas migration accounts for the largest share of new residents, with interstate migration not far behind.

A larger population creates additional demand for goods and services, supporting occupier demand across virtually every commercial asset class.

The growing appeal of Queensland is also evident in national investment flows. According to MSCI Real Capital Analytics, Queensland overtook Victoria during FY26 to become Australia’s second most invested commercial property market, accounting for 25% of national commercial sales volumes.

The shift represents a remarkable change over the past decade. In FY16, Queensland accounted for just 14% of national commercial sales volumes, while Victoria attracted 29%.

This redistribution of investment activity demonstrates how Queensland has transformed from a secondary market into one of Australia’s leading destinations for commercial property capital.

REA Group senior economist Anne Flaherty

Strong investor demand has also been reflected in pricing. According to realcommercial.com.au’s latest Commercial Yields Report for June 2026, Queensland recorded some of the strongest yield compression across the country over the past year, indicative of rising asset values and increasing competition among buyers.

Retail assets led the way, with yields in Greater Brisbane compressing by 25 basis points over the June quarter and 47 basis points over the year, representing the largest annual compression of any retail market nationally. Retail yields in regional Queensland saw ever greater compression, declining by 82 basis points over the year.

Demand has also strengthened across industrial and office assets. Industrial yields in Greater Brisbane compressed by 19 basis points over the 12 months ending June and by 7 basis points in regional Queensland. Office yields also tightened significantly, declining by 23 basis points in Greater Brisbane and 58 basis points in regional Queensland over the year ending June.

Investor appetite has been reinforced by several landmark transactions. Among the largest was Charter Hall’s acquisition of Sonic Healthcare’s Sullivan Nicolaides Pathology laboratory in Bowen Hills for $445 million. Another major deal saw Vicinity Centres acquire the remaining 75% stake in Uptown on Brisbane’s Queen Street Mall from IFM Investors for $212 million.

Commercial yields data over the three months through June 2026 reveal a mixed picture.

Queensland’s strong price growth has not eliminated its relative value proposition. Despite substantial yield compression over the past year, Brisbane continues to offer higher yields compared to the other capital cities for office, retail, and industrial assets.

This means investors can still achieve comparatively stronger income returns while investing in a market underpinned by solid economic and population growth.

Industrial property is perhaps the clearest example. Brisbane industrial yields remain well above those available in Sydney and Melbourne despite offering a relatively low-risk investment profile.

As investors increasingly seek a balance between income and long-term capital growth, Queensland’s combination of higher yields and strong fundamentals are likely to attract additional interstate and offshore capital.

With population growth remaining robust, Olympic-related infrastructure transforming Brisbane, and institutional investors increasingly targeting Queensland assets, the state’s commercial property market appears well positioned to continue outperforming.