Commercial Property Performance Historical Flash | Chifley Securities

the last 30 plus years direct commercial property in Australia has performed very well, and has shown a total return of 10% as well as relatively stable annualised income returns averaging 7.5%. If we look at the direct property market historically in Australia we would find that there were 2 periods of strong capital growth and 2 periods of negative capital growth.


In the 1980’s the capital growth was driven by economic growth and shortage of commercial property supply. Then in the 1990’s the Australian market saw a downturn in capital growth due to rapid expansion leading to excess supply and record interest rates which resulted in an oversupply and lower demand.

As the early 2000’s approached there was a huge shift in mindset and people began to see commercial property as an asset class and that was widely accepted by both managed super funds and self managed superannuation funds (SMSF).

With the Global Financial Crisis there was a short period of time where there was a considerable amount of asset repricing across all markets and commercial properties were not left out, but shortly after the market returned to moderate growth. Even with the multiple downturns over the years property returns have outperformed the overall economy making it an attractive investment option, not to mention commercial properties returns have seen a strong premium over inflation and government bonds.

These are all really important factors when determining if entering a market can turn into a timely and lucrative opportunity. This also helps to explain why commercial properties are so popular as the measures are important benchmarks for investors; commercial property income because you can hedge against inflation and still see a real return; for bonds it is because investors usually think of this as a risk free rate and expect a premium over the the risk free rate.