Adelaide's compelling case for strategic investment

As we navigate an increasingly complex investment landscape, South Australia presents a compelling proposition for private investors seeking stable, long-term growth across Adelaide's commercial real estate sectors. The convergence of economic resilience, affordability advantages, and robust fundamentals positions Adelaide as an attractive alternative to the volatility of larger capital cities.

Adelaide's commercial real estate market is underpinned by a stable local economy, with the government sector and defence industry providing crucial economic stability. This economic foundation, coupled with sustained growth in healthcare and education industries, creates an environment conducive to sustainable returns across multiple asset classes.

The numbers speak for themselves. Adelaide's office market has demonstrated exceptional performance, with total net absorption figures outperforming all other CBD office markets nationally. Prime grade net absorption has reached 108,500 square metres since early 2023, while secondary grade space has experienced negative absorption of 13,300 square metres – a clear indication of the flight to quality trend reshaping our market.

The residential sector presents particularly compelling opportunities. Adelaide achieved the strongest year-on-year rental growth nationally at 13.0% as of Q1 2025, yet existing apartment prices remain below the national average. This combination of strong rental performance and accessible entry points creates attractive conditions for investors seeking exposure to the residential asset class.

Despite this growth, Adelaide maintains its affordability advantage. The persistently low residential vacancy rate and undersupply of affordable apartments continue driving rental growth, with 702 units scheduled for delivery in 2025 – the strongest pipeline since 2020.

The industrial and logistics sector has experienced remarkable rental growth, with the North West precinct recording a substantial 26.8% increase over the past three years. This performance reflects stable demand coupled with exceptionally low warehouse availability, creating favourable conditions for existing asset owners and strategic acquirers.

Industrial leasing activity exceeding 3,000 square metres totalled 170,100 square metres over the last 12 months, surpassing the 10-year annual average of 159,400 square metres. Private investors have recognised these fundamentals, with an average transaction size of $16.9 million reflecting typical acquisition targets in this sector.

Adelaide's retail market demonstrates remarkable resilience despite cost-of-living pressures. Rolling annual retail trade growth improved to 2.8% as of April 2025, recovering from a challenging period in late 2024. The neighbourhood sub-sector's transition toward service-based tenancies, including allied health and employment services, has reduced vacancy to 4.7% – well below the five-year average of 5.7%.

For private investors, Adelaide offers a unique combination of stability and growth potential. Syndicates and high net-worth individuals have accounted for approximately 63% of neighbourhood shopping centre acquisitions since 2020, with an average deal size of $22.0 million. This activity reflects the market's accessibility and the defensive characteristics of non-discretionary retail assets.

As we look ahead, Adelaide's strategic infrastructure investment and steady population growth position the city as a strong foundation for diversified portfolios. The market's affordability advantage, coupled with its resilient economic base, creates compelling opportunities for investors seeking alternatives to the eastern seaboard's volatility while maintaining exposure to Australia's commercial real estate growth story.

To read further analysis, access our report of the Adelaide market for private investors: link