Published 16 June 2026. Figures and market conditions described here were current at that time and may have changed since.
Commercial property investors are increasingly focused on asset quality over broad sector performance, as the gap between top and bottom performers widens across all property types.
Ray White Group, Head of Research, Vanessa Rader said the latest PCA/MSCI data shows all property delivering total returns of 7.8 per cent and capital growth strengthening to 2.3 per cent, but the headline figures mask significant differences.
"Across every sector, the gap between the best and worst performing assets continues to widen, and that variation is becoming the defining characteristic of this market," Ms Rader said.
"Investors are increasingly willing to wait for assets that meet specific criteria around lease covenant, ESG credentials and physical quality, and the data is beginning to reflect those preferences in return outcomes."
Ms Rader said retail is the clearest example of a sector where broad recovery is real but individual performance varies significantly.
"Total returns reached 9.9 per cent nationally with capital growth of 3.8 per cent," she said.
Sub-regional centres recorded 12.4 per cent returns, regional centres 12.3 per cent, neighbourhood centres 9.4 per cent, and super and major regional centres 9.2 per cent. Western Australia led all retail states at 10.5 per cent, while New South Wales and Queensland both exceeded 10.2 per cent.
"The assets attracting the strongest capital growth remain those with strong anchor tenants, low vacancy risk and demonstrated trade area dominance," Ms Rader said.
According to Ms Rader, industrial property has found a more measured pace after years of exceptional performance.
"Total returns of 8.5 per cent with capital growth of 3.9 per cent remain compelling in absolute terms but no longer represent the exceptional outperformance of 2021 and 2022," she said.
Queensland industrial led at 10.2 per cent, New South Wales and Western Australia both recorded returns above 9.5 per cent, while Victoria continued to trail at 5.8 per cent.
"Rising vacancy in some industrial markets is beginning to introduce uncertainty, particularly for assets in secondary locations or with shorter lease profiles," Ms Rader said.
Ms Rader said office presents the most pronounced example of how average figures can mislead.
"Total returns of 6.3 per cent nationally with capital growth of 0.7 per cent suggest a sector slowly stabilising, but that average obscures enormous variation," she said.
Looking ahead, Ms Rader said expectations surrounding further interest rate movements and ongoing economic uncertainty are likely to amplify existing variation.
"The headline recovery is real, but the data is increasingly telling investors that where they buy, what they buy, and the quality of what is in place at the time of acquisition will determine whether their individual experience of this market looks anything like the national average," she said.
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