This article is from the Australian Property Journal archive
WITH little need to for inspections, development sites are dominating NSW commercial sales, as lockdown continues.
Over the June quarter Knight Frank sold $90 million in commercial investment properties, as buyer demand remained strong.
“We have seen across the state that the strength of our transactions proves there is still a large quantity of active capital in the marketplace looking to acquire development sites – in particular those that have limited planning or DA risk,” said Grant Bulpett, head of investment sales at Knight Frank, NSW.
Development sites or sites with potential for development comprised 62% of all deals for a total of $68 million across eight deals.
“While many vendors have adopted a wait-and-see approach during lockdown, owners that have chosen to place their properties on the market during this period are reaping the rewards as large buyer numbers compete over limited supply,” said Bulpett.
According to Bulpett, the market is currently ripe for vendors to enter their properties, especially with development potential to the market, with buyer’s keen to release pent up demand.
“We are expecting the supply versus demand dynamic to shift post lockdown as the accumulation of development sites hit the market, offering buyers more choice,” he added.
Interest and activity in greenfield development sites that have capacity for 50 to 150 housing lots, especially those within the North and South West of Sydney, has been reported as elevated by Knight Frank.
“Leading up to June the market was very strong, with assets across all markets trading at record prices,” said Anthony Pirrottina, associate director of investment sales at Knight Frank.
“Our team experienced a 100% clearance rate through the first six months of the year, with purchasers eager to secure commercial assets throughout Sydney.”
Strata office sales took in over took in more than $10 million, with the commercial property sales totalling $10.5 million.
“Previously we were seeing buyers favour scale to create efficiencies, but now are seeing larger groups look to secure two to three smaller sites to spread the risk,” added Demi Carigliano, associate director of investment sales.
Carigliano also noted that throughout Sydney’s lockdown preferences have turned towards off-market transactions rather than on-market, with vendors holding on sales campaigns during this period.
“We are already starting to see a backlog of properties ready to come to the market building up, and we expect that once restrictions are eased the market will be very active with these new opportunities,” said Carigliano.
Amongst recent development sales were 527 Victoria Road, Ryde for $1.4 million, 16-18 Willandra Street in Lane Cove North for $6.535m, 248-250 Marrickville Road, Marrickville for $7.67 million, 33 & 11 Magpie Hollow Road, South Bowenfels for $8.4 million and 1-5 Stanley Street, Kogarah for $9,012,400.
“In addition, if we start to see foreign travel return, particularly from Asia, we anticipate the return of Asian investors and capital will cause values to increase across all asset classes as this sector of the market has essentially been inactive for the past 18 months.”
