Australian real estate is entering a rare and significant cyclical upswing which could produce returns of between 7% and 9% over the next year, according to Dexus Research.
The firm said the property market was showing signs of recovery, seen only twice in the last 35 years, once after the 1994 recession and once after the global financial crisis in 2010.
The research and market insights division of real estate investment trust Dexus (ASX: DXS) said each recovery was followed by average total returns of 10% per year over five years.
“As the market shifts into recovery, Dexus believes improved investor confidence and strengthening fundamentals will drive increased transaction activity across all sectors,” it said in the Q4 2025 Australian Real Asset Review.
Calling it “the return of returns”, Head of Research Peter Studley said he expected the major real estate sectors to deliver returns between 7% and 9% over the next year.
“Australia’s economy is entering a phase of cautious optimism,” Studley said.
“We’re seeing easing inflation, stronger business confidence, and a transition from public to private sector-led growth.
“Compared to two years ago, we have higher initial yields, firmer demand, and a looming supply shortage—creating a strong foundation for recovery.”
Dexus Research said:
- the office market was showing signs of broad-based recovery, particularly in premium-grade assets
- retail continued to demonstrate resilience, with unlisted wholesale funds leading the MSCI Australian Wholesale Index with a 7.8% total return
- the industrial sector remained strong in prime locations, although demand was uneven in the third quarter of 2025, and
- infrastructure posted a robust return of 12.2% over the year to June 2025, and healthcare was beginning to rebound
