THE PROPERTY DEVELOPMENT REVIEW
Well located, Inner Sydney boutique apartment sites which target the high-end owner occupier or downsizer remain sought after and will continue to be throughout the property cycle. How would evaluate the impact of the past eighteen months in your local market? The entirety of 2022 was strong, with capital appreciation across almost all asset classes and record prices being achieved on a regular basis. This is at complete odds with the first 3 months of 2023, which has seen a swift softening and cooling of the market, and an abrupt reduction in the number of assets trading. Whilst materially lower prices have not been seen yet, clearance rates have halved in some markets, and the gap between vendors expectations and the price purchasers are willing to pay is most likely 10-20% difference depending on the asset. What are your expectations for the commercial property market over the next twelve months? I expect the next 12 months will see a return to a more ‘normal’ market, with good assets still attracting strong prices, but secondary stock and compromised properties being discounted accordingly. Without question, the increase in construction costs and cost of debt funding will soften assets across both the investment and development spheres, and we may see the market ‘buyers’ market’ continue.
I think overall the next 12 months should excite purchasers, as there will no doubt be opportunities to purchase good assets at reduced prices or with reduced competition. Talk us through the most significant deals you have transacted in the last twelve months. Our team has been very active over the past 12 months, with the South Sydney Investment Sales team transacting 35+ properties over the period. Notably, we transacted 719-721 Elizabeth Street, Waterloo for $12.7 million on behalf of a private vendor. The sale represents one of the highest rates per sqm on gross floor area for development sites to transact within our market for some time, and saw interest from a broad range of local purchasers looking to either develop and sell or built to rent. More recently we sold 55-99 Belmont Street, Alexandria for Aqualand to a local developer. The sale price of $15.25m represented a record GFA rate for Alexandria, reflective of the fact that this is arguably the best development site which remains in the suburb. Importantly this shows that quality assets which are targeted towards owner occupiers will continue to be sought after and attract premium pricing regardless of economic conditions.
April / May 2023 – 27
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