Australia’s commercial property market has split into clear outperformers and underperformers, with South Australia emerging as the nation’s standout while Victoria faces weakness across almost every indicator, according to the latest Property Council of Australia/Procore sentiment survey.
South Australia delivered the strongest national result, with its overall confidence index rising to 151 points in December and its state government performance index climbing to +78, the highest in the country by a wide margin.
“SA respondents expect the strongest industrial capital growth (86 points, nearly triple the national average) and robust gains across retirement living (56) and residential (100),” according to Ray White Group’s head of research Vanessa Rader.
The state’s forward work schedules remained elevated at 49 points, well above the national average of 38.
Queensland and Western Australia also posted strong results underpinned by pro-growth policy settings. Queensland recorded 143 points, supported by upbeat expectations in the office, industrial and hotel sectors. Western Australia reported a 59-point reading for forward work schedules and a positive state government performance result at +25.
New South Wales achieved 128 points overall, with residential expectations remaining firm at 75 points and industrial sentiment stable at 53. Office sentiment edged into positive territory at 20 points after a prolonged period of weakness.
The state’s infrastructure program helped sustain forward work schedules at 44 points, though planning system complexity continued to challenge developers, according to the survey.
Victoria showed the sharpest downturn, recording the nation’s only decline in forward work schedules over the quarter. At 14 points, its forward work expectations lagged every other mainland state by a significant margin.
State economic growth expectations were deeply negative at −40 points, matched only by the Australian Capital Territory.
Capital value expectations reinforced the weak outlook. Victoria anticipated office values would fall at −5 points, placing it among just two markets expecting negative office outcomes. Hotel expectations reached only 6 points, compared with Queensland’s 40.
“Most damning is the state government performance index at −65,” Rader said. “This catastrophic reading reflects deep industry frustration with planning processes, approval delays, and policy uncertainty.”
The result compared poorly with positive readings in Queensland at +20, Western Australia at +25, and South Australia at +78.
“The survey data confirms what transaction evidence already shows: capital is mobile, and it’s flowing to jurisdictions that demonstrate policy competence and growth-friendly settings,” Rader said.
The geographic divergence has opened investment opportunities across the country, according to the report. South Australia’s shift from manufacturing to defence, renewable energy, and advanced technology has strengthened demand in industrial assets and CBD office markets.
Queensland’s hotel and tourism assets continue to attract interest ahead of the 2032 Olympics, while Western Australia’s industrial sectors benefit from mining stability and emerging renewable energy manufacturing.
