Real Estate Returns Rebound as Investors Shift from Caution to Confidence
Dexus Research sees renewed momentum across office, retail and industrial sectors as market sentiment improves.
2 min
Australian real estate is showing signs of a comeback, with new data revealing accelerating returns across all major property sectors and improving investor confidence.
The latest Q3 2025 Australian Real Asset Review from Dexus Research highlights a positive shift in momentum, driven by falling interest rates, stabilising vacancy rates and renewed business sentiment.
The report suggests that the market may be transitioning from a period of “Fear of Acting Too Early (FATE)” to “Fear of Missing Out (FOMO)” as capital begins to flow back into real assets.
Unlisted property funds are leading the resurgence, posting their strongest returns in two years in June 2025, particularly in retail and industrial.
Dexus forecasts sector-wide returns exceeding 7% per annum within the next 12 months, buoyed by positive revaluations and rising deal activity.
In the office sector, the Sydney CBD appears to be entering a classic recovery cycle.
For high-quality assets, capitalisation rates are believed to have peaked, vacancy rates are levelling off, and rental growth is back on the rise. With demand strengthening and limited new supply, Dexus says this could mark a rare window of opportunity for investors.
Retail property is also showing signs of renewed strength, helped by real wage growth and declining mortgage rates. CBD vacancy rates have dropped and rents are firming, especially in regional shopping centres.
Meanwhile, infrastructure transaction volumes rose significantly in Q2 2025, with renewed focus on renewable energy and battery storage projects.
Government spending is playing a major role, with the Federal Government’s $60 billion infrastructure pipeline and various state initiatives expected to drive new project originations into 2026.
Overall business confidence is improving, even amid a sluggish broader economy. Falling inflation, political stability, and a rising equities market are contributing to stronger leasing expectations in the second half of the year.
“Global uncertainty continues to influence sentiment in capital and occupier real asset markets,” said Peter Studley, Dexus Head of Research.
“However, with interest rates falling and supply constrained, there are compelling reasons to expect stronger real estate returns in the months ahead. The big question is, how quickly will the tide turn from Fear of Acting Too Early (FATE) to Fear of Missing Out (FOMO) for real asset investors?”
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A five-bedroom Palo Alto home designed by Steven Ehrlich is listed for $44 million, making it the city’s most expensive listing. Built around a dramatic concrete spine, the home features four courtyards and a pool.
3 min
For years, tech entrepreneur Asher Waldfogel and his wife, Helyn MacLean, dreamed of building a modern house in Palo Alto, Calif.
The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of Old Palo Alto.
So they tapped architect Steven Ehrlich to create a design that paid homage to its surroundings with stucco, mahogany and titanium zinc cladding. They spent $20 million over several years building the house, completed in 2005.
Now looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for $44 million—the most expensive listing in Palo Alto.
Waldfogel is an angel investor who co-founded Redback Networks, a telecommunications-equipment company. MacLean previously had a career in fundraising.
The couple purchased the roughly 0.4-acre site for $7.1 million in 2000 and demolished a circa-1930s Spanish Colonial home. The house they built pinwheels around a central staircase. It has 7,900 square feet of livable space, with four distinct courtyards and a pool.
A key feature of the home is a cast-in-place concrete wall, or spine, that is two stories high and about 80 feet long. “There’s a little bit of controlled chaos in what comes out of the form,” unlike a perfectly uniform surface, Waldfogel said. “If you want that, you do it in plastic.”
Waldfogel said he and his wife are thinking about the next phase of life now that their daughter is grown, although they have not decided where they will move. They also have a home in Sun Valley, Idaho.
“Right now we’re just trying to emotionally let go and decide what to do next,” he said.
Palo Alto, an epicenter of venture capital and tech startups in Silicon Valley, is home to some of the country’s biggest tech titans. Sales volume and prices are rising, with a median sale price of $3.5 million for the three months ending in August, up 5.8% year-over-year, according to real-estate brokerage Redfin.
Arthur Sharif of Sotheby’s International Realty—San Francisco Brokerage has the listing.
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