Global Investors Turn to Australia’s Property Market

Australia’s commercial real estate market could gain from rising global uncertainty, as investors reconsider exposure to the US and instead look to the Asia-Pacific for more secure and stable returns. The move aims to safeguard growth while navigating unpredictability tied to a potential second Trump presidency.

Right now, Australia’s property sector is catching international attention. Major institutional investors, some of whom gathered at the Milken conference in the US, are quietly weighing safer opportunities outside of the American market. Since 2016, global investors have ramped up their exposure to Asia-Pacific real estate, drawn by resilient fundamentals and solid demand across key cities including Sydney and Melbourne.

During Trump’s first term, commercial property investments across Asia-Pacific climbed from US$25 billion to US$45 billion, expanding their share of global flows from 15% to nearly 25%. While global property markets briefly cooled, inflows have started to recover, with US-based buyers leading the charge thanks to a stronger dollar. Investors appear to be pivoting from high-risk ventures to defensive assets like real estate, with Australia high on the radar.

Australia’s listed property trusts are reflecting this shift. New analyst data show investment weightings to REITs increased for the fourth straight month in March. Although many large funds remain underweight on listed property, it’s now the smallest underweight since 2017. Lower inflation and speculation of local interest rate cuts are feeding confidence, pointing to further upside for commercial property investments.

If trade tensions continue to rise globally, Australia might benefit even further. With fewer trade ties to the US than many regional neighbours, the local market may be insulated from disruptive fallout. Sectors like building materials could even see lower input costs, boosting development potential just as demand for stable income-generating assets intensifies.

Source: Australian Financial Review, ASX, REA.