Benchmarking Adelaide 2025: A turning point for property, investment and urban potential

Adelaide is entering a pivotal moment in its global evolution. According to the newly released Benchmarking Adelaide 2025 report, which looks at the city’s progress among 20 peers’ from around the world, Adelaide is showing tangible progress in innovation and perception, two areas long viewed as Adelaide’s Achilles’ heel. With these advancements come both opportunity and responsibility, particularly for the property and investment sectors.

As Ben Parkinson, South Australia Managing Director, JLL, puts it, “We’re witnessing a shift. Adelaide is no longer just an affordable city with great wine and beaches. It’s now a serious contender in innovation, energy, and education. But for our city to fully reach its potential, we need to align our property strategies with this newfound momentum.”

Dr Tim Moonen, Co-Founder & Managing Director, The Business of Cities and Co-author of the report, suggests “From an international perspective, Adelaide appears to be on the right track with its startup ecosystem, its mix of industries, and links to the global marketplace.” 

The report reveals Adelaide has made strong gains in innovation and knowledge - driven by world-class research institutions, a thriving education sector, and signs of momentum in the startup and tech ecosystem. From Lot Fourteen’s innovation precinct to the University of Adelaide and UniSA merger, these foundations are positioning Adelaide as a knowledge capital.

Foreign direct investment (FDI) is following suit. Adelaide now ranks 6th among peers for absolute levels of FDI and is one of the top 100 fastest-growing global markets for overseas investment. Commercial real estate is a major beneficiary, with corporate investment into new facilities in Adelaide doubling year-on-year.

“There’s strong interest from overseas capital, particularly in the industrial and logistics sector,” Parkinson says. “That growth reflects the strategic advantage South Australia has in terms of cost, access, and stability. Investors are now treating Adelaide as a viable, long-term market.”

Rick Warner, Director of Research, JLL, says “When you look at the transaction volumes recorded in the comparable cities in the report, Adelaide is one of the strongest performers, which speaks to the liquidity of the market and the depth and diversity of buyer. Since the start of 2024 to May 2025, total transaction volumes across Adelaide’s office, industrial, retail and hotels sectors reached AUD 2.8 billion. This volume placed Adelaide the highest destination for capital of all the comparable cities outside of the United States – outpacing Auckland, Fukuoka, Edmonton, and the European cities.” 

Post-pandemic trends continue to shape property demand. Industrial and logistics remain in favour, with large-format retail and neighbourhood shopping centres proving to be resilient asset classes.

But the story of Adelaide’s office market is one of contrasts.

“There’s strong return-to-work confidence here, and that’s reflected in the tight vacancy rate, less than 3.5%, for premium new office stock,” Parkinson explains. “But the broader CBD vacancy is 15.1%, and a staggering 70% of that vacancy is tied up in the bottom 17% of buildings. The old, inefficient stock simply doesn’t match modern expectations.”

“But we’re not alone in the battle against persistent office vacancy. The good news is that when you look at the Adelaide CBD office market comparatively to the other global peer cities included in the report we’re actually faring better than the majority of comparable cities,” continues Warner.

As at Q1 2025, the vacancy rate in the Adelaide CBD sits in the lower half of the comparable cities, below Auckland (15.2%), Pune (15.6%), Busan (17.5%), Edmonton (20.2%), Portland (21.0%), Sacramento (22.0%), and Austin (25.2%). The divide highlights the urgent need for strategic upgrades and thoughtful repositioning. However, adaptive reuse, especially converting office buildings into residential or hotel stock, is not a silver bullet.

“It’s easy to point to conversion as a fix for housing or vacancy,” Parkinson adds. “But in practice, very few buildings meet the criteria needed for successful residential conversion. Fire codes, glazing, and floorplate configuration all matter. That said, hotel conversions have been relatively successful, think Peppers or the Mayfair.”

Despite these bright spots, Adelaide’s liveability and productivity rankings have slipped. Public transport access is improving more slowly than international counterparts, and commute times are increasing. The report signals the need for accelerated investment in infrastructure and digital connectivity.

Moonen adds “Other cities internationally continue to move ahead on infrastructure, efficiency and productivity. These areas are essential not only for upholding quality of life, but also for private sector confidence in Adelaide as a place to invest and to innovate. Adelaide’s potential will be diluted unless it is able to organise its growth, integrate transport, and optimise land uses. This is not only a technical challenge but a leadership and mindset challenge.”

Another challenge is land supply. Industrial land values are rising, largely due to a historic lack of readily available, shovel-ready land.

“Government’s reclassification of land has been positive,” Parkinson notes. “But we need a pipeline of development-ready land to sustain momentum. Without that, we risk missing the wave of inbound interest.”

Adelaide’s property market has traditionally lacked diversity in housing products. Build-to-rent projects, while increasingly common on the East Coast, are still rare in South Australia due to unfavourable economics. Parkinson points to innovative models such as rent-to-own as a potential game-changer.

“Rent-to-own is a gateway to home ownership that could work well here. We also need more affordable product close to infrastructure for essential workers, from nurses to teachers. That’s where the social impact meets smart planning.”

The current population of metropolitan Adelaide, at 1.4 million, is closely comparable to many of its peer cities internationally, such as Porto and Muscat. Yet other cities have been experiencing faster population growth. Auckland had the same population as Adelaide in 2001 and is now reaching 1.7 million, while San Diego, Austin, Penang and Pune have all broken through 2 million in recent decades as they have become international destinations for innovation and investment.

“Population growth is always a catalyst for innovation, infrastructure, and ultimately livability. It creates inner-suburban density, which creates village vibrancy, higher suburban amenity, and also a creates a momentum of demand for public transport, walking and cycling corridors, and a higher quality of living amenity such as green space,” Warner explains.

Ultimately, the Benchmarking Adelaide 2025 report underscores a city with global promise, but also with critical decisions ahead. As Adelaide strengthens its reputation in sustainability, electrification, and global connectivity, the property sector will be central to how these strengths are leveraged.

“We’re at a crossroads,” says Parkinson. “The next few years will define how Adelaide grows, not just bigger, but better. If we align our property, infrastructure, and investment strategies, we won’t just keep pace with the world, we’ll lead in our own right.”

For more information, watch the podcast episode here: https://open.spotify.com/show/6gP58gsA0lJQZGbxvPk1YW?si=m3z_hnifTWSfmZwjhtPuAg&nd=1&dlsi=601b5d25c59c4f02

Download the full report here: https://committeeforadelaide.org.au/2025-benchmarking-adelaide-report/