Commercial property investment in Australia: how market fundamentals and investor behaviour shape decisions amid heightened uncertainty

Purpose Acknowledging the complexity of property investment decision-making under heightened uncertainty, this study examined the dynamic relationship between market fundamentals, investors’ behavioural biases, and the moderating effects of uncertainty. Design/methodology/approach This study explored these dynamics through the perspectives of 412 commercial property investors in Australia. Using partial least squares structural equation modelling, a PROCESS macro model was developed to represent the interaction between fundamentals, behaviour, uncertainty and investment allocation decisions. Findings The effects of fundamentals and certain behavioural biases on investment decisions diverge in response to uncertainty. Fundamentals exhibit an inverse effect, while biases such as anchoring, overconfidence and intuition positively impact investment intention. These relationships are more pronounced as uncertainty rises, indicating that decision-making norms are dynamically responsive to external market conditions. Practical implications By representing market fundamentals, behaviour, and uncertainty in one system that explores decision-making, this study provides insights into how investors navigate different economic climates. Leveraging these insights could facilitate adaptive investment strategies that integrate fundamentals and the nuance of human behaviour. Originality/value The growing literature on adaptive markets recognises the pervasive role of emotions and market imperfections, both of which impact decision-making. Uncertainty introduces an additional layer complexity which could alter existing relationships and introduce new norms under which decisions are made, and outcomes are determined. This study modelled these complex relationships in one system to explore how property investors approach allocation decisions amid uncertainty.