Retail Investment yields in Western Australia have historically traded at softer capitalisation rates to the east coast, a legacy of past perceptions around economic volatility & the tyranny of distance. In traditional pricing logic, higher yields exist to compensate for higher risk. Yet the WA market of today looks anything but risky.
On almost every real-economy metric – wages, household spending growth, population growth, labour market strength, consumer confidence and exports – WA leads the nation. If investors
are earning higher yields for assets in a market that is growing faster and spending more than any other state, the yield premium begins to look less like compensation and more like
opportunity.
“WA’s yield premium no longer reflects higher risk – it reflects untapped opportunity. Investors are being rewarded for fundamentals that are stronger than anywhere else in the country,” said
Philip Gartland, National Partner at Stonebridge Property Group.
This raises the question – is WA pricing lagging true market fundamentals?
Powered by real household income
WA households benefit from the strongest spending capacity nationally, with Perth recording the highest capital-city median weekly earnings of approximately $1,500, and regional WA also
outperforming at around $1,442. By comparison, median weekly earnings are approximately $1,450 in Melbourne and $1,416 in Sydney. The State’s resource economy plays a key role, with
mining wages averaging roughly $2,593 per week, directly supporting household balance sheets and driving resilient spend across supermarkets and convenience-based retail.1
Despite softer iron-ore prices, the surge in gold, rare earths and other commodity prices has reinforced WA’s economic resilience, supporting household incomes and sustaining strong retail spending.
This income strength is translating into retail performance. Household spending is sitting 14.8% above long-term averages, the highest in Australia, with annual growth in retail spending up
5.2% versus 4.6% nationally.2 Even through a higher-interest-rate environment, WA consumers are spending with confidence.
Population growth feeding retail demand
Emerging industries such as renewable energy, battery manufacturing, agribusiness, and biomedical research precincts are diversifying Western Australia’s economy and attracting
skilled migration.
WA’s population grew 2.3% over the past year, the fastest nationally and well above the 1.6% national rate. The state recently surpassed 3 million residents and Perth is projected to become
Australia’s third-largest city by 2050.3
More people translate to stronger retailer turnover and greater demand for new stores, yet construction remains as challenging and costly as on the east coast, perhaps even more so
given competition with the resources sector for tradespeople. Crucially, this is not a short-term structural migration trend and is supported by employment, lifestyle, and affordability
advantages.
“The fundamentals supporting WA retail are deeper and broader than ever before, with sustained population and income growth translating into stronger retailer performance and
rising confidence from both private and institutional capital,” said Justin Dowers, National Partner at Stonebridge Property Group.
Confidence visible in discretionary spending
WA consumers are not only earning and spending more, they are demonstrating confidence through discretionary decisions. New vehicle sales are ~24.7% above decade averages, the
strongest result in the country.2 At the same time, unemployment sits near 4.1%, around one-fifth below decade norms, and WA recorded the strongest wage growth nationally at 3.7% year-on-year. A large, well-paid and secure workforce underpins income durability for daily-needs retail landlords.
Further supporting this structural shift, the WA Government committed $25 million in May 2025 to bolster research and innovation infrastructure across 20 leading health and medical
organisations, reinforcing WA’s growing appeal for skilled migrants, international students and retail-service demand. 4
Affordability protecting disposable income
Perth remains one of the most affordable major capital cities, with a median house price of $954,686. That compares to $1.72m in Sydney and around $1.06m in Melbourne and Brisbane.5
While east-coast households face increasing mortgage and rental pressures, WA households retain greater discretionary capacity after housing costs, supporting stable spending on
everyday retail.
Urban growth reshaping catchments
Population demand is being reinforced by significant urban-renewal and growth-corridor development. Burswood Point will deliver approximately 4,500 dwellings, East Wanneroo is
earmarked for around 50,000 homes over the long term, and Cockburn Central and Subi East are emerging as major mixed-use hubs.
These precincts are densifying trade areas, improving transport connectivity and expanding customer bases for well-located neighbourhood shopping centres. Importantly, this growth is
already underway.
Recent successful retail investments such as Joondalup Square and Ellenbrook, along with newly delivered premium assets like Treendale Lifestyle and Busselton Central, demonstrate
strong investor/developer confidence and performance potential in WA. “WA’s retail story has real momentum – buyer depth is strong across private and institutional
capital, and yields still offer meaningful value,” said Carl Molony, National Partner at Stonebridge Property Group.
Infrastructure investment underpinning WA’s growth
Major infrastructure investment is strengthening WA’s retail appeal and investor confidence. The Perth Airport Master Plan 2026 forecasts direct and indirect employment to almost triple from
around 27,300 jobs in 2024 to 75,400 by 2046, with its annual contribution to the state economy set to rise from $6.2 billion to $17 billion. Poised to become Australia’s second-largest airport,
the expansion will enhance connectivity, tourism and logistics capacity, reinforcing the foundation for sustained retail and population growth.6
Defence-sector investment is also accelerating, with more than $12 billion committed to AUKUS-related naval infrastructure at Henderson and HMAS Stirling, reinforcing WA’s status as
a national hub for shipbuilding, sustainment and high-skilled employment.7
The 2025-26 State Budget commits more than $10.7 billion to transport infrastructure over the next four years, reflecting the depth of investment across key projects such as METRONET,
Westport and major road and port upgrades. 8 Complementing this is a $500 million program of hospital improvements, together reshaping WA’s urban structure and expanding the
employment hubs that support long-term retail and population growth.4
WA powers nearly half of Australia’s exports
Western Australia accounted for nearly half of Australia’s total goods exports in 2024, reaching $234.6 billion or 45% of national exports. Despite softer commodity prices, the State
maintained a substantial $182.7 billion trade surplus. Imports rose 7% year-on-year in 2024 to $52 billion, led by machinery, vehicles and refined petroleum – reflecting ongoing investment
and robust consumer demand across the State.9Strong export earnings continue to filter through the State’s economy, sustaining employment, wages and retail spending.
Yet yields still suggest caution
In FY25, retail transactions above $10 million in WA traded at an average fully leased yield of around 6.44%, compared with approximately 6.25% in NSW and 6.36% in VIC.
Despite stronger economic momentum and superior demographic tailwinds, WA is still pricing at a discount to the east coast, a spread that potentially reflects legacy sentiment rather than
fundamentals. Investors are effectively securing higher yields without a corresponding increase in risk.
Final thought
For years, WA was viewed as a market where higher yields were justified by higher perceived risk. In reality, investors today are achieving superior returns not because they are taking more
risk, but because pricing has not yet fully caught up with the state’s strengthened fundamentals.
WA retail represents a fundamentals-driven opportunity, with legacy perceptions lagging the market’s current performance. As evidence continues to accumulate quarter after quarter, the
relative value advantage is likely to narrow. Early capital that recognises this shift will be best positioned to benefit.
Sources
1 Australian bureau of statistics, August 2024
2 Commbank, October 2025
3 Australian Bureau of Statistics, June 2025
4 WA Government, 2025
5 Domain, June 2025
6 Perth Airport Master Plan 2026
7 Australian Government, September 2025
8 WA Budget Overview 2025-26
9 WA Trade Profiles, March 2025
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