Residential development demand rising in Sydney
New housing opportunities in Sydney are becoming increasingly scarce as demand skyrockets, according to CBRE.
As the rental squeeze tightens on commercial and industrial properties, residential development opportunities in NSW’s capital are becoming rare.
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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 said.
"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 the 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.
"The subject site had no approval or income, and we still had multiple purchasers making offers on the site," he said.
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.
