West Australian commercial property transactions drop 34.4 per cent to $3.19 billion

But the market slump has more to do with cautious investors than a withdrawal of capital, says Stephen Harrison, RWC Western Australia managing director.

“The urgency that characterised the market when rates were falling has given way to a far more considered approach,” he says.

“Buyers aren’t stepping back from the market altogether; they are simply taking longer to satisfy themselves on building condition and covenant strength before committing.”

Anticipating interest rate cuts

The Reserve Bank of Australia held the cash rate steady at 4.35 per cent this month after three consecutive interest rate rises earlier in the year. Economists at the four major banks expect rate cuts to begin next year, with the Commonwealth Bank forecasting a downward shift as early as May, while ANZ, Westpac and NAB forecast a mid-year start to monetary easing. 

Harrison believes investors will pounce once rate cuts begin and may even acquire existing premium stock at prices below new-construction costs.

“Although the market’s maybe slowed and stagnated, it hasn’t actually really started going backwards per se, and now that more interest rate increases are now looking less likely than likely this year, I think the Perth property market will stay relatively stable,” he says.

“Then if money starts getting cheaper, I think we’ll probably start seeing price growth again.”

Residential capital pivot

The tide is already beginning to turn for Western Australia’s commercial property market thanks to federal budget changes to negative gearing and tighter self-managed super fund borrowing rules. Residential property investors are already beginning to switch to commercial property, and Ray White Commercial researchers expect industrial facilities and convenience retail to be the primary beneficiaries of this capital pivot.

“We’re already starting to get a lot of buyer’s agents who have traditionally only dealt in residential reach out, and I think it’s probably going to drive commercial in the lower end of the market,” Harrison says.

“It will be investors who have typically invested in residential, investing sub-$2 million. I think a lot of them will look to commercial property because it’s positively geared and you can quite easily borrow in a self-managed super fund to buy it.”

Industrial supply bottlenecks

Industrial transactions for the 2025-26 financial year fell to $1.2 billion, mainly due to a lack of supply and delays in power connections at new development sites, Harrison says. 

“So there’s an issue with Western Power actually connecting power to subdivisions,” he says.

“For instance, in the far northern suburbs, there’s industrial land that is all subdivided, sitting there waiting to go, just waiting to be connected to electricity.”

Office oversupply amid frozen pipeline

Western Australia’s office market recorded a 5 per cent dip in transaction volume to $513.9 million. 

At 15.4 per cent, Perth’s vacancy rate is the third-highest in Australia, behind Melbourne (18.9 per cent) and Adelaide (16.3 per cent), according to July figures from the Property Council of Australia.

A chronic oversupply in the CBD market and expensive construction costs have translated to a complete dearth of new office construction in Perth. 

“The market really, for the last 10 years, has been in a state of oversupply,” Harrison says.

“There’s literally no construction pipeline for office, and I mean literally; there’s not a single office that’s being built in the Perth CBD or planned to be built.”

Retail and hotel transactions drop

Retail transactions dropped sharply by 62.1 per cent to $813.4 million, but this is due to bumper sales in the previous financial year, including Vicinity Centres paying $420 million for a 50 per cent stake in the regional shopping centre Lakeside Joondalup, formerly owned by Lendlease.