Strong Investor Confidence in Industrial Property
Industrial real estate continues to lead the pack for private investors, both in Australia and globally. Knight Frank’s newly released Wealth Report 2025 confirms that industrial property remains the most popular commercial sector.
The report shows a clear rebound in global commercial real estate (CRE) in 2024. Total transaction volumes rose by 8%, reaching US$806 billion.
Australia Emerges as a Global Contender
Australia ranked as the sixth most active CRE market in the world. Transaction volumes jumped by 57% year-on-year, hitting US$32.8 billion in US dollar terms. Nearly half of that came from industrial assets, which attracted US$15.9 billion. A key driver of this surge was the growing demand for data centres.
“Industrial continues to be one of the strongest and most stable sectors of the Australian commercial property market,” said James Templeton, National Head of Industrial Logistics at Knight Frank. “Market conditions have normalised after the boom, but tenant demand remains strong. Rental growth is still happening—though more selectively depending on location and supply.”
What Investors Are Focusing On
A recent Knight Frank survey of 150 family offices in Australia found the following preferences:
- Industrial: 42%
- Data Centres: 21%
- Infrastructure: 18%
Globally, industrial/logistics came in as the second most preferred sector at 13%, just behind the living sectors (14%). Luxury residential was close behind at 12%.
Outlook for 2025: A Strong Comeback
Chief Economist Ben Burston believes industrial real estate will lead the recovery of Australia’s CRE market in 2025. “The first interest rate cut has improved investor sentiment. Asset values are starting to bounce back, and we’re already seeing more competition for industrial properties,” Burston said. “Sydney, in particular, is showing signs of further growth.”
Regional Disparities Still Exist
However, not all regions are moving at the same pace. In Melbourne, new tax policies have shaken investor confidence. As a result, activity there has slowed compared to other major cities.
Industrial Property Still Leads the Way
Looking ahead, investors are expected to be more selective. They will likely focus on high-demand areas and quality assets. Even so, industrial real estate remains the top choice for commercial property investment. The sector offers resilience, growth potential, and strategic advantages that continue to attract attention.
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