THE PROPERTY DEVELOPMENT REVIEW
fundamentals like transport accessibility, lifestyle and retail amenity. These projects would be hard to stack up financially today, but their acquisitions are strategic for future high quality finished product in the context of limited end user supply over the near to medium term. What does the development pipeline look like in your specific markets and what are some of the bigger development projects slated for commencement in the next six months? Sydney’s Lower North Shore is undergoing transition in multiple market due to council and state led planning changes. Macquarie Park for example is set to deliver a volume of supply over the long run, across market, social, affordable and build to rent housing. This is a function of broader renewal brought about by NSW over the last few years to cement the transition of Macquarie Park from a traditional suburban business park, to an accelerated lifestyle precinct with broad based employment, diverse retail, activated lifestyle amenity, education opportunities and increased transport accessibility. The announcement at the end of April for various Transit Oriented Development precincts in existing town centers like Gordon, Killara, Roseville and Lindfield are part of the state governments midrise housing reform and will permit mid rise apartment buildings in traditional low density suburbs. This reform, aimed at tackling affordability through increase supply, will provide fertile ground for a variety of developers across multiple dwelling typologies to build high value pipeline. Our growth centers in Northwest and Southwest Sydney continue to expand and a few major dispositions from large stakeholders are expected. These projects have capability to deliver anywhere from 500 to 800 dwellings in 1 transaction, like our recent transaction at 3 Andalusian Way, Castle Hill that has potential for close to 875 units.
In your market, in the January-March period, what asset classes experienced the most buyer demand and has this changed over the last 12 months? It’s been a flight to quality market place. High quality offerings with strong fundamentals were experiencing heightened levels of demand. To appeal to the buyers that are active today, who have strong credentials and financial backing, a site needs to have all the blue-chip qualities, as well as a strong buffer in the revenue against the fluid construction costs. With macros stabilizing for the most part, we’ll see capital previously on the sidelines jump back in, to acquire more diverse stock that what we’ve seen trade recently. This diversity will be in location and scale. Moreover, the alternative living sectors like co-living, student accommodation, and seniors are still enjoying strong flows of investment capital. Anecdotally, there still seems to be a slight misalignment between vendor and buyer expectations. If this is true in your market, what needs to happen to bridge that gap and can you see it playing out in 2024? The neutrality of market conditions will help to realign the expectations for everyone in the market, including valuers and financiers. Ultimately, there a big reliance on comparable transaction data and the more activity we see in the market the smoother the transaction flow will be. New markets, like the TOD precincts on the North Shore, are likely to take a bit of time to mature from a site sales perspective. This is a new piece of legislation that has been dropped on everyday homeowners, and I suspect they’ll want time to digest the potential financial outcomes and subsequent settlement periods available. Our forecast for the new financial year is certainly focused on seeing more deals executed under more stable conditions, and a marked increase therefor of reliable transaction data to bring comfort to more capital pools.
May / June 2024 – 23
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