Issue 28 | The Property Development Review

Market Overview - NSW

NSW Market Overview from Grant Bulpett Knight Frank Sydney

Q. What have been the fundamental drivers of demand amongst buyers in 2021? Flight to quality, and hard assets backed by a low rate environment. Ultimately, real estate is a fixed stock commodity, and there's been somuch pressure simply to secure assets and get investment monies off the balance sheet, and into production. Q. Reflecting on recent transactions, what has been the profile of developers and has this shifted from previous years? A. Without a doubt we've seen a contraction in overseas investors. We're fortunate to have excellent close personal relationships with our peers in Singapore, Hong Kong andMalaysia to help continue to drive overseas demand, but it has slowed down. Local investors aremoving outside their traditional hunting grounds as well, which is adding to a deeper and richer bidding profile. Q. What types of sites are most in-demand given the current strong residential housing market? A. Lowdensity stock and boutique DA approved unit sites are hot. Larger yielding sites are picking up again, but usually with some delayed settlement period. High velocity liquidity comes in the low density space and DA approved product though. Q. Howwould you evaluate the impact of the past eighteen months in the development market? A. The last 18months have really shown that Sydney still has issues with undersupply, as demand has continued to be strong. The velocity at which capital is moving is really something to watch. It’s likely to slowdown with some of this inflationary pressure out of the US, but we anticipate this will be counteredwith the onset of international migration in the new year.

Q. What are your expectations for the development sites market over the next twelve months? A. We've got a couple of big puzzle pieces still floating around including inflationary pressure, policy pressure on the building industry, the ongoing release of land and increasing inbound migration. I think in a general sense, we'll see continued strong demand for sites, and an increase in the larger format high-density sites picking up steam too. Q. Talk us through the most significant deals you have transacted thus far in 2021. A. Metropolitan Sydney is so diverse. We've enjoyed success with deals around the newWestern Sydney Airport (WSA), as well as emerging centres along new transport corridors, and infill sites closer to the CBD. Most of the deals over the past 9months for residential development have been in that +/- $15Mprice bracket, and amix of raw and approved sites. Our work around theWSA can range from$30-$100Mover the same period, and those prices are steadily on the rise.

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