What is the outlook for Australian commercial property in 2026?
The picture is split by supply. In office, new-supply approvals are falling across the major capitals — steepest in Sydney (-34%), Brisbane (-28%), Perth (-17%) — which puts a floor under well-located, well-let buildings even while headline vacancy stays high. Industrial supply is thinner and demand steadier, so it carries the least downside on our read; retail is the most mixed. Macro conditions are neutral and transitional: the cash rate is on hold and bond yields are elevated, which keeps pressure on values but is easing as inflation cools. MPLC Research publishes the city-by-city detail, all built from public RBA and ABS data.
Where are Australian commercial property cap rates heading?
Cap rates (the yearly income as a share of price) rose as interest rates climbed, and on our model they still sit a little below where rates justify — meaning recorded values have lagged the rate move and some further softening is likely before fair value is reached. The gap is widest in retail and narrowest in industrial. We publish the fair-value cap rate for each city and sector in our reports.
Which Australian commercial property sector has the best outlook?
On our current read, Industrial offers the best value relative to where rates say it should trade, with the lowest modelled downside; Retail carries the widest risk, because its values have lagged the rate move by the most. That ordering shifts as the data updates — we refresh it every edition.
Is industrial property still a good investment in Australia?
Industrial has the lowest modelled five-year downside of the major sectors on our read, helped by a thin new-supply pipeline and steady tenant demand. Yields are keen, so it is not cheap in absolute terms — the case rests on income durability rather than a bargain entry. This is information and forecasts only, not financial advice.
How does MPLC Research forecast commercial property?
A two-layer model. First, a macro spine links the cash rate, bond yields, credit spreads and inflation to a fair-value cap rate for each sector, using tested error-correction relationships. Second, a supply/demand layer reads building approvals and precinct-level demand down to the SA2 level (about 1,100 precincts). The two combine into a five-year total-return range via a Monte-Carlo simulation. Every input is public data (RBA, ABS), every figure is sourced, and the output is QA'd by specialists before publishing.
What data does MPLC Research use?
Only public, official data — chiefly the Reserve Bank of Australia (cash rate, bond yields, credit spreads) and the Australian Bureau of Statistics (building approvals, CPI, employment), plus listed-market (A-REIT) signals. We do not use paid private feeds, and we do not develop, invest in or broker property, so there is no conflict of interest.
Is now a good time to buy commercial property in Australia?
MPLC Research provides information and forecasts only — not financial advice, and not a recommendation to buy, sell or hold. What we can tell you is where the model puts fair value versus today's pricing, how much of any repricing is already done, and the honest range of five-year outcomes including the downside. You bring that to your own decision or your adviser.
What is a cap rate, and what is 'fair value'?
A cap rate is a property's annual net income as a percentage of its price — like the interest rate on a building. A higher cap rate means a cheaper asset for the same income. 'Fair value' on our model is the cap rate the asset should trade at given today's interest rates and risk — so if the fair cap rate is above today's market cap rate, the model sees prices as still a little rich, and vice versa.