Real Estate Returns Rebound as Investors Shift from Caution to Confidence

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?”

Leading Australian development manager Fortis has secured a landmark off-the-plan sale at Richmond Square, with high-profile hospitality entrepreneurs Bruce and Chyka Keebaugh purchasing a 550sqm penthouse residence in Carmine House, establishing a new price benchmark for apartment living in Richmond.

The purchase underscores the continued demand for premium, amenity-rich residences in Melbourne’s inner east.

The transaction marks a significant milestone for the $330 million mixed-use precinct, reinforcing buyer appetite for integrated, lifestyle-led developments.

Richmond Square comprises two residential offerings – Carmine House and Wiltshire House – alongside a 57-room boutique hotel, strata office space and a curated mix of retail and lifestyle operators.

As part of Carmine House, residents have access to hotel-style amenities and services, including concierge, housekeeping, dry cleaning and in-residence food and beverage delivery.

Best known for building The Big Group into one of Australia’s leading luxury hospitality and events businesses, the Keebaughs were drawn to the precinct’s integrated lifestyle offering and its proximity to Melbourne’s hospitality, cultural and sporting precincts, while remaining well connected to the Mornington Peninsula, where they spend much of their time.

As well, Chyka is well known to Australian audiences as one of the original stars of The Real Housewives of Melbourne, appearing across three seasons of the hit reality series.

Alongside her business ventures with Bruce, she has built a public profile as a lifestyle authority, authoring two books on home and entertaining, Chyka Home and Chyka Celebrate.

“We weren’t simply looking for a luxury apartment,: the couple said. “We were looking for a home that delivers an exceptional lifestyle every day. The combination of design, walkability, security and the broader precinct vision for the broader precinct immediately stood out.”

Jordan Winada, Head of Acquisitions (Commercial) Victoria at Fortis, said the result highlights evolving priorities at the top end of the market.

“This sale reinforces that premium buyers are prioritising the complete lifestyle experience,” says Winada.

“They’re increasingly looking beyond the apartment itself and assessing the quality of the surrounding neighbourhood as well.”

Sean Cussell, Director at Christie’s International Real Estate Victoria, who negotiated the transaction, said the result reflects the lack of comparable product at this level of the market.

“There’s simply no direct comparison for this in Richmond. It’s not just an apartment; it’s part of a fully integrated precinct combining residential, hotel, workplace and lifestyle amenity,” Cussell said.

“Buyers are increasingly assessing the broader offering, from amenity and walkability to service and convenience. Projects that deliver a complete lifestyle experience continue to outperform.”

The sale contributes to Fortis’ strong national performance, with the business recording more than $124 million in sales since March, the last three all record-breaking penthouse sales across the country, reflecting sustained momentum across its portfolio and continued appetite for premium, design-driven developments.

This follows Fortis’ recent record-breaking Ruby House penthouse sale in Sydney’s Double Bay, which set a new benchmark for apartment living in the suburb and underscores the strength of demand at the ultra-premium end of the market.

Richmond Square will announce its hospitality and lifestyle operators in the coming weeks as the project progresses towards completion this year.

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.

Hospitality entrepreneurs Bruce and Chyka Keebaugh have set a new price benchmark for apartment living in Richmond with their purchase of a Carmine House penthouse.