March 19 2026 | Deals | M&A Advisors | Real Estate
Key Takeaways: 2026 trends and outlooks
- A more positive macro backdrop: Positive net migration, gradual interest rate reductions and tight labour markets are collectively positioning Australian real estate for increased equity deployment and improved forward-looking returns.
- Valuation reset creating opportunity: The stabilisation of capitalisation rates across commercial real estate — office, retail and industrial — has driven a reset in valuations, making the asset class more attractive than it has been in recent years.
- Retail leads the recovery: Institutional capital is re-entering the retail property market, which has recently been dominated by high-net-worth private investors and syndicators, signalling renewed confidence in the sector.
- Global capital eyeing Australia: Substantial pent-up demand from global institutional investors, combined with a more favourable economic environment, is expected to drive heightened activity in 2026 compared to the previous two years.
- Regulatory and tax headwinds to navigate: The introduction of the ACCC's mandatory merger regime and state-based taxes affecting offshore investors introduce complexity — but also create competitive advantages for local capital.
"Global institutional capital is seeking opportunities to re-enter Australia. With substantial pent-up demand and a more favourable economic environment, 2026 should see heightened activity compared to 2024 and 2025."
Tyran Collins, Capital Transactions Manager at The GPT Group, sees a convergence of favourable conditions reshaping Australia's commercial real estate landscape heading into 2026. The GPT Group is one of Australia's leading diversified real estate investment management companies, with a portfolio spanning office, retail and logistics assets. For Collins, the case for renewed activity in the sector rests on a compelling combination of macroeconomic tailwinds, stabilising valuations and the return of global institutional appetite.
A valuation reset and the return of confidence
After a period of adjustment, Collins believes the commercial real estate sector has found its footing. "In commercial real estate — including office buildings, retail shopping centres and industrial warehouses — we've observed a reset in valuations driven by the stabilisation of capitalisation rates," he says. "This is making real estate investments more attractive than they have been in recent years."
The positive macro backdrop reinforces this view. Net migration remains strong, interest rates are gradually declining, and Australia's labour markets remain tight — all of which support occupier demand and enhance the relative value of real assets. As operating markets continue to improve, Collins anticipates an uptick in deal volumes across both real estate M&A and capital markets activity throughout the year.
Sector by sector: where the deals will be
Within commercial real estate, Collins identifies retail property as a standout theme for 2026. Institutional capital is re-entering a market that has, in recent years, been dominated by high-net-worth private investors and syndicators — a shift that signals growing confidence in the sector's fundamentals. Significant deals in both shopping centres and office towers are also expected, underpinned by a strengthening deal pipeline. "We are experiencing stronger deal flow, and I expect this to continue into 2026," he says.
The office market tells a more nuanced story. While transaction activity and volumes should begin to rebound, investor caution is likely to persist. "Investors are expected to remain selective, with a focus on high quality, premium or A-grade buildings in core locations such as Sydney's CBD," Collins says. The bifurcation between prime and secondary assets will remain a defining feature of the market.
Global capital and pent-up demand
One of the most significant drivers of Collins' optimism is the volume of global institutional capital looking to re-enter the Australian market. After a period of caution, international investors are once again eyeing Australian real estate as an attractive destination. "Global institutional capital is seeking opportunities to re-enter Australia," he says. "With substantial pent-up demand and a more favourable economic environment, 2026 should see heightened activity compared to 2024 and 2025."
Navigating regulatory and structural headwinds
Not all of the forces shaping the market are benign. Collins flags two structural headwinds that participants will need to manage carefully. The first is the introduction of a mandatory merger regime by the Australian Competition and Consumer Commission, which requires notification of acquisitions exceeding a monetary threshold. "The intent is to enhance scrutiny in competitive markets, but it may add a layer of complexity. It's just uncertain at this stage how it's going to play out," he acknowledges.
The second is the impact of state-based taxes on offshore investors, which have acted as barriers to entry in some markets and prompted certain global capital sources to redirect investments elsewhere. However, Collins notes the silver lining for domestic players: "These state-based taxes provide local investors with a competitive advantage in specific locations throughout Australia, as they are not subject to foreign owner taxes."
Equity market volatility and constraints in debt financing round out the list of challenges. Collins' prescription for navigating them is characteristically straightforward: alignment. "Strong alignment between managers and investors, with both parties working towards the same goal, will be key to achieving successful outcomes," he says. In a market defined by both opportunity and complexity, that shared clarity of purpose may prove to be the most valuable asset of all.
