The numbers coming into Rethink Group right now tell a story that the broader market has not yet caught up with.
For 12 years I have been making the case that Australian investors should look seriously at higher-yielding alternatives to residential property, and the data across our business now shows that case being acted on at scale.
Here is my read on where investor capital is heading, what is driving it, and how I would position for the months ahead.
A structural shift, not a sentiment swing
The biggest trend in the market right now is, without question, the structural shift from residential to commercial property. It would be easy to dismiss this as a cyclical move driven by short-term sentiment, but that would be a fundamental misreading of what is happening.
The 2026 budget removed the negative gearing concession for new purchases of established residential property. That was a structural policy shift, and investors are responding accordingly by repositioning their portfolios around the new rules rather than waiting for the old ones to return.
See also: What investors should know about the negative gearing changes
Some of that capital is also heading offshore, with New Zealand hitting record after record, and Australian investors recognising that the opportunity there is real.
The smart money is not waiting to see what happens next.
It is moving now into assets that generate genuine net income from day one, and commercial property, particularly industrial and essential-service retail, is the primary beneficiary of that capital flow.
Data and trends
In September, Rethink Investing, our commercial buyer's agency, settled 33 properties worth $124.9 million. While that is a strong result in its own right, the more important signal for investors trying to read the market is what is happening at the front end of our pipeline.
New client sign-ups at Rethink Investing have surged, and that matters because our pipeline gives us a three- to four-month forward view of where the market is heading.
A new client typically spends around a month in the search phase before finding the right asset, and settlement then takes approximately 60 days from there.
More sign-ups today therefore mean more transactions through the final quarter and into early 2027, and the pipeline is as strong as I have seen it.
What is driving that surge is a clear flight away from low-yielding residential towards higher-yielding alternatives.
We are seeing strong demand for commercial property, for unit block acquisitions, and for select high-yielding residential at lower price points.
The financing side of the group is telling its own story, with Rethink Financing now almost matching Rethink Investing in volume terms. We are seeing three distinct groups driving that surge.
The first is existing residential investors who are refinancing equity out of their residential holdings in order to deploy it into commercial.
The second is first-time commercial buyers who need specialist commercial finance rather than the residential lending products they may be familiar with.
The third is portfolio builders who are upgrading from smaller commercial assets into larger ones by selling and redeploying their capital.
The wider market data supports what we are seeing on the ground. Retail commercial property delivered total returns of 7.3% in Q3 2025, long after the mainstream narrative had written retail off as structurally impaired post-pandemic.
National industrial vacancy sits at just 3.2%, while industrial yields compressed 19 basis points year on year in Brisbane and 37 basis points in Perth.
Investors already in those markets are watching their assets revalue upward, while those still waiting for certainty are watching the entry point close.
See also: Which commercial sector is right for SMSF investors
Elsewhere across the group, Rethink Renewables signed 15 new projects in September alone, reflecting growing interest from commercial landlords in energy infrastructure as both a yield play and a tenant-retention play.
Every division across the group is performing well in what remains a complex market.
Separating noise from reality
The noise, as always, is interest rates. The latest rate rise is creating further pressure on residential investors, and in my view that will only accelerate the flight to yield we are already seeing.
See also: What a 4.85% cash rate means for property investors
However, my clients are not making decisions based on what the RBA does next. They are making decisions based on what a specific asset produces in net income relative to what it costs to hold, and that calculation either works or it does not regardless of short-term movements in the cash rate.
With most investors planning to hold for 10 years or more, what rates do over the next few months is negligible in the grand scheme of things.
The reality is the yield gap. Residential yields after all real outgoings are running at under 2% in most capital city markets, while quality commercial assets are producing between 5.5% and 7% net.
That gap is not a matter of opinion. It is arithmetic, and investors are finally acting on it.
Practical takeaways for the months ahead
Run the honest net yield. If your portfolio is still entirely residential, calculate its net yield today after every outgoing rather than relying on the gross figure. Then compare that number with what you would receive from a quality commercial asset producing 5.5 to 7% net, because for most investors that comparison is the only data point that really matters right now.
Stop waiting for the perfect entry point. It does not exist, and by the time you feel certain the market has usually already moved. In my experience, the best buying windows do not announce themselves loudly; they arrive quietly while most people are still debating whether to move.
Treat the policy change as permanent. Investors who are still processing the 2026 budget as a temporary headwind are waiting for conditions that will not return. Those who recognise it as a structural change and position themselves accordingly will be well placed to look back on this period as a turning point.
The macro picture all of this paints is of an investor class that has done the numbers and made a rational decision. Investors have done the maths, and the numbers are now telling them what I have been saying for 12 years.
Images from Pexels
