Foreign investment surges in australian commercial property.

Foreign investment in Australian commercial property has rebounded strongly, reaching $15.9 billion year-to-date through the second quarter of 2025, marking a significant recovery from 2023's subdued levels.

Ray White Group, Head of Research, Vanessa Rader said this remarkable momentum is being driven by improvements in regulatory efficiency and evolving investment strategies across multiple international markets. "We're witnessing a dramatic recovery from the subdued levels of 2023 when foreign investment flows plummeted to just over $10 billion," Ms Rader said.

"FIRB processing times have improved significantly, with median processing now taking just 29-34 days for commercial proposals, creating a more competitive environment for attracting international capital." Ms Rader explained that Australia's regulatory framework now better balances appropriate oversight while recognising that delayed approvals can deter investment in an increasingly competitive global market.

According to Ms Rader, American investors continue to lead both the approval pipeline and transaction activity in the Australian market. "US investors maintain their position as the largest source of cross-border capital with $6.9 billion in flows year-to-date through mid-2025, which we expect to increase to over $9 billion by the conclusion of the third quarter," she said. "This sustained interest reflects both the structural appeal of Australian commercial property to US institutional investors and the continued currency advantage making Australian assets attractive on a USD basis."

Japanese capital has returned with renewed vigour to the Australian market, contributing $2.5 billion in cross-border transactions through mid-2025. "This represents Japan's re-emergence as a major player in Australian commercial property," Ms Rader said. "Japanese investors show particular interest in office and industrial assets where long-term lease structures align with their institutional investment preferences."

Ms Rader highlighted that Korean institutional investors have emerged as significant new players in the market, with a focus on residential developments. "Korean investors are showing particular interest in build-to-rent developments and student accommodation projects in major metropolitan areas, arriving at a crucial time when purpose-built rental housing is needed to address supply constraints," she said.

Singapore and Hong Kong continue to maintain steady investment flows, with Singapore reaching nearly $1.2 billion year-to-date through 2025, while Hong Kong capital is expected to contribute over $1 billion by the end of the third quarter.

"Perhaps the most striking development in current foreign investment patterns is the emergence of Thailand as a significant new player," Ms Rader said. "Thai investors are focusing primarily on commercial real estate, suggesting a strategic diversification of investment sources now targeting the Australian market."

The composition of foreign investment reveals strategic shifts toward next-generation commercial assets, according to Ms Rader. "Commercial real estate attracted $10.0 billion in approved foreign investment through the 2024 calendar year, with international investors increasingly targeting specialised assets," she said. "Data centres, cold storage facilities, and advanced logistics infrastructure that benefit from structural economic changes are seeing particular interest."

Ms Rader said that alternative residential asset classes have become especially important in attracting foreign capital. "Purpose-built student accommodation and build-to-rent developments are drawing significant international interest, addressing critical supply gaps while providing investors with income-generating assets aligned to demographic trends," she said.