Sydney Residential Development Sites In Highest Demand For Years

29/04/2013 2:28 am

According to CBRE Residential development opportunities in Sydney are becoming increasingly rare, as the rental squeeze tightens on commercial and industrial properties.

CBRE Director of Capital Markets Daniel O’Brien said demand for real estate with redevelopment potential within the City of Sydney local government area was at its highest level in a decade – as highlighted by the recent multimillion-dollar sale of a site at Rosebery.

“As vacancy rates for commercial and industrial premises contract, opportunities for new housing are becoming scarcer across the city,” Mr O’Brien remarked,

“The demand for this kind of development is so high that prospective buyers are making offers on sites that don’t earn an income and haven’t even received development approval.”

Examples include:

  • A Rosebery sale, which was negotiated this month by Mr O’Brien, Matthew Ramsay and Mark Silva from CBRE. The vacant property was sold on behalf of a private vendor. Mr O’Brien was unable to confirm the selling price. Located at 767-779 Botany Road, the 3,998sqm site was purchased without a Development Approval and with no holding income by Botany Road Project Pty Ltd. the site’s prime location on the corner of Botany and Hayes Road offered an ideal residential development opportunity.
  • In January, Liv Style Group snapped up an art deco warehouse, office and showroom building situated just two sites down for $4.4 million. The 1,290sqm property at 755-759 Botany Road has been put forward for rezoning, which would allow residential redevelopment of the site.
  • Meriton, forked out $100 million on an industrial site at 19-33 Kent Road Mascot earlier this year. Meriton plans to build 1,000 apartments on the property. According to The Australian, Meriton plans a $750 million development on the 31,500 sqm site, comprising 1000 residential apartments and a retail component.

CBRE Director of Residential Development Matt Ramsay said there had been a notable increase in buyer activity involving both local and offshore groups, which had led to several large deals being recently finalised in South Sydney.

“The potential for change of uses, proximity to rail and the end price point is driving demand for mixed use sites in this market,” Mr Ramsay remarked.

“We are experiencing price growth that will continue during 2013 and is expected to underpin interest in upcoming opportunities with CBRE preparing to market another $100 million of sites in South Sydney.”

Recent figures from the Real Estate Institute of New South Wales show demand for Sydney rentals continues to strengthen, with the city’s residential vacancy rate hovering at 1.8 per cent last month.