Why Commercial Property Isn’t Following the Residential Market
While many investors are waiting for commercial property prices to fall alongside the residential market, buyers’ advocate Abdullah Nouh says they’re looking at the wrong data, with demand strengthening across several commercial sectors.
2 min
For months, Australia’s property conversation has centred on falling house prices, higher interest rates and the impact of the Federal Budget on investors.
But according to Melbourne buyers’ advocate Abdullah Nouh, many investors expecting commercial property to follow the same path are overlooking what’s actually happening across the market.
“The biggest mistake investors are making is treating commercial property as one market that moves in one direction at one time,” Nouh says.
“Office towers, neighbourhood medical centres, industrial warehouses and childcare centres all respond to completely different supply and demand dynamics.”
Rather than experiencing a broad downturn, he says that parts of the commercial market continue to perform strongly, particularly sectors supported by essential services and with limited new supply.
Neighbourhood retail centres anchored by supermarkets and medical services have proven more resilient than many expected, while industrial property continues to benefit from tight supply in most major cities.
Medical centres, childcare assets and other essential service properties are also attracting sustained tenant demand despite higher borrowing costs.
Office markets, however, are telling a different story.
Premium buildings in well-connected locations are beginning to stabilise, Nouh says, while secondary office stock in oversupplied precincts continues to face pressure.
“This isn’t a story about commercial property going up or going down,” he says.
“It’s a story about asset selection mattering more than the headlines.”
The changing market is also altering the questions investors are asking.
Rather than focusing solely on buying another residential investment property, Nouh says more investors are now looking for higher rental income and improved cash flow.
“Instead of asking how to buy another investment property, investors are increasingly asking how they can generate more income from their portfolio,” he says.
He believes commercial property has become part of that conversation because it can deliver stronger rental returns while still offering long-term capital growth when quality assets are selected carefully.
However, Nouh warns investors against assuming every commercial property represents a sound investment simply because it offers a higher yield.
“I’ve seen commercial properties remain vacant for years because they’re in locations with weak business activity,” he says.
“A high yield isn’t necessarily evidence of a good investment. Sometimes it’s evidence of the opposite.”
Instead, he says investors should focus on the same fundamentals that have always underpinned successful commercial acquisitions, including tenant demand, constrained future supply, location quality and whether another tenant would readily occupy the property if the existing lease expired.
“The lease and the tenant both matter,” Nouh says.
“But neither replaces buying a quality asset in a quality location.”
As investors continue to assess the outlook for property following this year’s Budget changes, Nouh believes the biggest opportunity may lie in recognising that commercial property is not a single market.
“Property has never moved as one market,” he says.
“The better question isn’t whether commercial property will fall in the short term. It’s which assets are likely to be in greater demand over the next decade, and whether today’s market creates an opportunity that looks obvious in hindsight.”
Ophora Tallawong has launched its final release of quality apartments priced under $700,000.
From bushland greens to valley reds, the country’s most awarded designers are proving that the best colour palette was never on a swatch card; it was outside the window all along.
Ophora Tallawong has launched its final release of quality apartments priced under $700,000.
3 min
Ophora Tallawong has launched its final release of apartments, positioning itself as one of the last opportunities for buyers to secure a new Sydney home below $700,000.
The project, located in one of the city’s fastest-growing corridors, is offering rare buyer protections at a time when affordability is tightening and competition for quality stock is intensifying.
According to JLL’s Q2 2025 Apartment Market Overview, Sydney’s median apartment price has already climbed to $795,000, setting a record.
With interest rates now on a downward trend and supply still heavily constrained, experts warn that today’s price brackets may not exist next year.
Ronnie Rahme, Development Manager at KDMC, said buyers were responding to the combination of quality and value.
“You simply don’t see this level of finish at these price points anymore,” Rahme said. “That’s why demand has been so strong for this final release.”
Dr Andrew Wilson, Chief Economist at My Housing Market, says the economic drivers are clear. “High rents and higher prices continue to provide clear incentives for first-home buyers and investors chasing solid investment returns,” he told Kanebridge News.
“New government initiatives to support first-home buyers will also act to place upward pressure on prices.”
The bigger picture
JLL’s research reinforces that point. While over 15,700 apartments are expected to be delivered nationally this year, a 40% uplift on 2024, Sydney remains undersupplied, with demand continuing to outpace completions.
The report also notes that reductions in the RBA cash rate are expected to further fuel buyer activity, with constrained supply continuing to push prices higher into 2026.
With construction costs soaring, Government contributions climbing, and interest rates remaining high, projects are harder than ever to bring to market, putting upward pressure on newly completed apartments.
The pipeline of new supply is shrinking as developers delay or abandon projects that no longer stack up financially.
According to JLL’s overview, only 2,554 completions are forecast for Sydney this year – against annual demand exceeding 30,000 dwellings.
At the same time, population growth, rental demand, and first-home buyer incentives are intensifying competition for limited stock. The imbalance between constrained supply and resilient demand is leaving new apartments scarcer and more expensive across Sydney.
Ophora: Last Chance In Sydney’s northwest
Developed by KDMC and designed by Architex, the $50 million project has launched its final release, with limited availability of 81 brand-new residences from just $545,000 for a one-bedroom, or $695,000 for a two-bedroom, which is far below Sydney’s median and significantly cheaper than nearby competition.
The five-storey development at 37 Reis St, Tallawong, combines affordability with premium inclusions more often seen in luxury builds: ducted air-conditioning, timber floors, premium finishes, fridge cavities with water plumbing, video intercom systems, fibre internet, EV charging, landscaped gardens and a rooftop terrace with sweeping views.
It also comes with something almost unheard of at this price point, a 10-year Latent Defects Insurance (LDI) policy. Typically reserved for multimillion-dollar projects, LDI guarantees structural integrity for a decade and is only awarded to developers with a strong building track record.
SHC Insurance Brokers founder Stefan Hicks acknowledged the rarity of obtaining LDI, particularly for entry-level residential apartment complexes like Ophora.
“Gaining LDI is no mean feat. It’s offered selectively to developers and builders with a quality building history, and it requires both parties to employ an independent inspection service throughout construction,” he said.
“While this insurance is well-established around the world in about 40 countries, in Australia, we’re typically seeing high-end buildings covet LDI. The fact that Ophora has joined this exclusive list of quality-assured builds is a coup for entry-level home buyers.”
Raising the standard for affordable luxury
Rahme says the KDMC team wanted to set a new benchmark.
“Our mission with Ophora has always been clear: to raise the standard of what buyers should expect, regardless of budget,” he said.
“We’ve delivered a collection of apartments with finishes and features you’d usually only find in luxury projects, and we’ve backed it with one of the most stringent insurances available in the market. That gives buyers peace of mind that their investment is protected for the long term.
“People are walking through and realising you simply don’t see this level of quality at these price points anymore, as it’s effectively replacement cost in 2025.
“With rates coming down and limited competition, buyers and investors are moving quickly because they know the window won’t stay open. Investors, who have recently purchased at Ophora, have reported a strong rental demand, with minimum rental yields exceeding five per cent.”
Developments like Ophora, move-in ready, competitively priced and backed by rare structural protections (LDI), may represent the last chance for buyers to secure a sub-$700,000 apartment in Sydney.
View Ophora on cpmrealty.com.au
To arrange a private viewing or request more information, contact Sam Elbanna from CPM Realty: 0411 222 260
Three-Michelin-starred chef Massimiliano Alajmo will host an intimate Mediterranean sailing aboard Crystal Serenity, redefining fine dining at sea.
From Tokyo backstreets to quiet coastal towns and off-grid cabins, top executives reveal where they holiday and why stepping away makes the grind worthwhile.
