Shopping centres lead commercial property investment boom.

For the second consecutive year, the retail sector has outperformed all other major commercial property categories, capturing 42 per cent of the nation's total $31.3 billion in transactions, according to JLL Research. The office sector contributed $9.6 billion, while industrial property accounted for approximately $8.7 billion.

Shopping centres have become particularly attractive to investors, driven by consistent population growth and strong competition among different buyer groups. Private capital made a significant push into the market, often outbidding institutional investors and syndicates to become the top acquirer on a dollar basis, with private capital acquisitions totalling $4.3 billion of retail deals.

The market saw 29 deals exceed $100 million and 13 transactions close for more than $300 million, leading to a 66 per cent jump in average deal size to $124 million.

JLL retail investments head for Australia and New Zealand, Sam Hatcher, said demand for retail assets remained strong across the board.

"Demand for retail assets was unwavering, with bidder depth exceeding historical averages," Mr Hatcher said.

Regional shopping centres dominated transaction activity, making up 43 per cent of deals and totalling $5.6 billion in transactions. Yields on regional shopping centres also tightened to an average of 5.8 per cent, reflecting increased investor confidence in the sector.

Partial-interest sales grew in popularity throughout the year, with several major transactions demonstrating this trend. GPT Group spent $1.2 billion acquiring a half-stake in both Sunshine Plaza in Queensland and Macarthur Square in New South Wales from Lendlease. QIC and ART purchased 19.9 per cent of Westfield Sydney for $863 million, while JY Group acquired half of Westfield Marion for $670 million.

JLL expects demand to remain robust in the new financial year, supported by limited supply and a growing number of international players seeking retail assets on Australian shores.

The strong performance of retail property comes as the sector continues to demonstrate resilience despite broader economic challenges. Private capital made up $4.3 billion of retail deals, highlighting the sector's appeal to a diverse range of investors beyond traditional institutional buyers.

Mr Hatcher said the outlook for retail property investment remains positive as competition for quality assets intensifies.

"Demand for retail assets was unwavering, with bidder depth exceeding historical averages."