Investment in commercial real estate climbed to $42.6bn in transactions during the 2019 financial year, according to new data from Cushman & Wakefield.

The research revealed a 22% rise in transaction values from $34.9bn in 2018. The figures also showed an increase of 22.6% deal flow in office property, accounting for more than half of all commercial property deals.

Record-low vacancy rates in the Sydney and Melbourne markets boosted office deals, resulting in rent growth and upside expectations for investors.  At the same time, despite remaining low, office yields continued to attract investors compared to bond yields, which fell significantly over the past year.

Dexus’ acquisition of the 80 Collins Street precinct in Melbourne for $1.476bn and Scentre’s sale of its towers above Westfield Sydney to Blackstone for $1.5bn finished the year on a high note.

“Investment in Australian commercial property remains in strong territory, with sustained investor demand for office assets across the country as rents ran higher and vacancies tightened. We saw landmark office deals in Sydney and Melbourne recently completed, and the pipeline remains strong,” said John Sears, Cushman & Wakefield head of research for Australia and New Zealand.

The research also noted that foreign investment increased in 2019, recording a total of $19.3bn, 45% of all transaction volumes. Multinational investors were among the major sources of foreign investment in the country, with Canada and Singapore as top sources for inbound capital.