There is no doubt that residential property prices are decreasing across Australia, with the Australian Bureau of Statistics reporting that the property price in Australia’s eight capital cities fell 1.5% in last year’s September quarter. Melbourne and Sydney saw declines as much as 3 and 2.1%.

But with the price of Melbourne’s residential dwellings on the decline, what does this mean for the commercial property industry?

Research analyst for Domain, Eliza Owen, recently explored the impact that the current residential market is having on Melbourne’s commercial property landscape in this article from Commercial Real Estate

Whilst some experts suggest the commercial property industry may slow alongside Melbourne’s residential market, this may not be the reality. The large variety of different commercial properties available allows for demand in the market to remain strong. 

Commercial properties are varied, with very different characteristics, dimensions and functions because they accommodate businesses of all different industries, shapes and sizes. Because of this, demand remains strong, particularly for industrial properties. 

Last year, the average yield range was between 4.5% and 6% for an office or industrial asset and we expect this to remain positive, due in part to the increase in online spending and e-commerce businesses in Melbourne. In 2018, Aussies spent $21.3 billion buying goods online, creating an increase in demand for warehousing space from local e-retailers.

We expect this to continue and, with demand for industrial warehouses high in metropolitan areas in particular, demand will remain for industrial properties in Melbourne’s outer suburbs such as Truganina and Tarneit in the West, Braeside and Noble Park in the South, Somerton and Epping in the North and Ringwood in the East. 

There are still returns to be made for those looking to invest in Melbourne’s property landscape despite the residential market position. To learn more about Melbourne’s current commercial property market or to get advice on buying or selling a property, contact one of our agents -