THE PROPERTY DEVELOPMENT REVIEW
Which segments & type of property in your market are exceeding expectations and what do you attribute this to? High-end luxury properties, such as waterfront homes, properties with panoramic views, and those with high-end finishes and amenities, have been performing exceptionally well. This has been attributed to the Lower North Shore’s high concentration of affluent buyers willing to invest in premium properties. The lifestyle appeal and the area’s scenic beauty, proximity to the water, and prestigious reputation make it a desirable location for luxury living. Spacious family homes are also in high demand, particularly those near top schools, which is a significant factor driving demand for family homes. Shifts in buyer priorities and changing lifestyle preferences, such as more time spent at home and a greater focus on quality of life, are shaping demand for modern, low-maintenance apartments. There’s a growing preference for a lifestyle with less upkeep, ideal for professionals, downsizers, and those seeking a lock-and-leave lifestyle. Opportunistic buyers are prevalent in properties needing renovation or redevelopment. They are attracting more interest than anticipated with the potential for value addition through renovations and capitalising on future capital gains. How is the residential investment market performing in your area? The residential investment market on Sydney’s Lower North Shore is experiencing a nuanced performance influenced by several key factors. The Lower North Shore continues to be a sought-after area for renters, which supports robust rental demand and relatively stable rental yields. An interesting observation, though, is that due to economic conditions, price sensitivity has increased as the year has progressed, with tenants displaying a more considered approach as opposed to the ‘frenzy’ we saw at the beginning of the year. Hence, there is more balance and stability in the rental space now. The proximity to business districts, top schools, and lifestyle amenities makes the Lower North Shore a popular choice for both families and professionals. Property values in the Lower North Shore are generally resilient and show positive capital growth. The scarcity of available properties in desirable locations helps drive property values, and continuous demand from owner- occupiers and investors supports price stability and growth. Rental yields on the Lower North Shore tend to be relatively lower compared to more outlying suburbs due to higher property values. However, yields remain stable and attractive in the context of the area’s overall market performance. High entry prices can compress yields, but strong rental demand helps maintain reasonable returns. Quality and well- located properties command higher rents, which can offset the lower yield percentage. The outlook for residential investment on the Lower North Shore remains positive, given the area’s enduring appeal and the broader trends in the Sydney real estate market, as well as the
ongoing urbanisation and population growth in Sydney suggest continued strong demand for residential properties. Despite an increase in cost of living, property values have remained relatively stable – how do you anticipate the remainder of 2024 will be in terms of market activity & transaction volumes? The remainder of 2024 will likely see a stable property market regarding values, with potential moderation in transaction volumes due to economic pressures and increased living costs. While the market might face some challenges, the Lower North Shore’s inherent appeal and stable fundamentals are expected to support continued interest and activity. Activity will be heightened in anticipation of the ‘domino’ effect as many Sellers hold off on listing their properties as they navigate their next move. This is causing many sellers to be in ‘limbo’ until their desired property becomes available. Property values will likely remain relatively stable, with a limited supply of properties and continued demand from buyers and investors. Transaction volumes might experience some moderation due to the increased cost of living and potential financial constraints on buyers. Different segments of the market may behave differently. The luxury segment of high-end properties may see continued interest from affluent buyers less sensitive to cost- of-living increases. Buyers may become more cautious, focusing on properties that offer better value or meet specific needs. First-time buyers might face more challenges due to increased costs. The affordable segment of more affordable properties could experience more robust demand from buyers seeking value, but lower transaction volumes might occur if affordability becomes a significant issue. What are the fundamentals that are driving investment & purchasers in your local market area & where are the opportunities for sophisticated investors / developers? In the Lower North Shore, the fundamentals driving investment include its desirable location, which offers lifestyle appeal, including scenic views, waterfront access, parks, recreational facilities, and proximity to the CBD. Strong local amenities, including the presence of highly regarded schools and educational institutions, drive family demand. The area’s affluent population increases its economic stability. The area’s high-income residents contribute to a stable and robust property market. Transport is a huge factor. Well-connected transport networks, including trains, buses, and major roads, enhance accessibility. Areas near transport hubs or commercial centres are ideal for mixed-use projects, leveraging the synergy between residential and business needs. Opportunities exist for sophisticated investors and developers in redevelopment projects, luxury and high-end markets, mixed-use developments, high-density residential projects, sustainable developments, and collaborative ventures. By focusing on these areas and trends, investors can capitalise on the area’s strengths and evolving market demands.
September / October 2024 – 27
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