Australian shopping centres have emerged as the strongest-performing commercial property sector, with investors targeting supermarket-anchored neighbourhood centres as economic uncertainty weighs on discretionary retail spending.

Retail property transactions reached about $13 billion in FY2026, representing 42% of the $31.3 billion invested across Australia’s major commercial property sectors, according to JLL Research.

Neighbourhood centre transactions alone hit $2.8 billion, Stonebridge data showed, as institutions, private investors, family offices and offshore buyers sought assets offering reliable income and exposure to population growth.

Average neighbourhood centre yields tightened by 49 basis points to 5.98%, while average sale prices reached a record $7,160 per square metre.

Major transactions included IFM Investors’ $300 million fund-through purchase of four planned Melbourne centres, including Botanical Village in Mickleham and Riverwalk Town Centre in Werribee.

The portfolio, which will be developed by Oreana, was acquired at a 6% yield.

Other deals included the $79 million off-market sale of Tooronga Village and the purchase of Caringbah Shopping Village at a yield below 4%.

Demand is also being supported by limited development. Sydney, Melbourne and Brisbane are forecast to add more than 647,000 residents over the next three years, requiring an estimated 65 additional supermarkets.

But only 36 neighbourhood centres are expected to be developed, leaving a potential shortfall of 29 supermarkets.

Fund-through transactions accounted for 23% of neighbourhood centre investment activity during FY2026, representing more than $600 million in deals.