Developers are frothing over the potential of Western Sydney suburbs, with unprecedented levels of stock in the pipeline.
The region’s booming population is outstripping demand in Western Sydney and the pipeline needs to be rapidly advanced in order to meet housing supply needs in the future, according to research.
And much like the 1979 Village People classic, developers chasing a return in this tricky market will also Go West, where the skies are blue. But more importantly where the land is cheaper.
Significant population growth over the next 20 years due to the combined impacts of natural population increases, interstate movements back into the state and immigration has fuelled strong demand for residential housing stock. Particularly in the more affordable climates of Western Sydney.
A Ray White Commercial Western Sydney report predicts that the population is expected to balloon to 2.9 million by 2036.
The region is also expected to be Australia’s third-biggest economy, contributing $104 billion to gross domestic product.
Up until March this year, Ray White has tracked 487 projects in the development pipeline that have the potential to add 40,774 dwellings over the next three to five years in Western Sydney.
There are 6889 units now under construction, which are likely to be completed in the next 18 months, the bulk of these are in Parramatta, followed by Cumberland.
A further 19,295 units are in early planning and DA-application phase in the region.
It is not just Parramatta that is forging ahead in the boom of Western Sydney.
There are also major infrastructure projects in the pipeline for the region, including the Aerotropolis and the Parramatta Light Rail, due for completion in late 2026 and late 2023 respectively.
Minor changes to the Aerotropolis Precinct Plan were finalised in May 2023, bedding down planning controls for the $5-billion Sydney Science Park at Luddenham. It is planned as a mixed-use smart city that will create an epicentre for research, development, education, commercialisation and innovation.
The Nancy-Bird Walton Airport is due to open in 2026 and will be a major drawcard to the region.
The Bradfield City Centre, a 114ha site adjoining the airport, is being planned by the NSW Government’s Western Sydney Parkland Authority as a “21st century global city with a 24/7 economy” and a strong focus on advanced manufacturing.
Plans for new office precincts in regional centres such as Liverpool and Penrith across university campuses and within shopping centres are being considered.
Ray White’s latest office forecast also predicts 959,878sq m of new office stock coming on to the market. While smaller developments are trickling into the marketplace over the next 12 months, the bigger story for Parramatta is the churn of refurbishment space expected to exit and re-enter the market as tenants vacate their current accommodation.
For example, 150 George Street will bring 21,964sq m of refurbished space into the market, along with 8899sq m at 97 Macquarie Street, which has recorded some partial pre-commitment.
Property developers Cite Group say developers are being attracted to the Western Sydney region due to its projected economic growth.
Large suburban blocks able to accommodate a granny flat have been increasingly popular over the past few years, providing value for developers. Cite Group pinpointed Blacktown, Pendle Hill and Baulkham Hills as developer hotspots in the hunt for development upside.
The NSW Land and Housing Corporation has a $32-million build-to-rent housing development at North Parramatta under way, with a community housing provider required to deliver 65 dwellings for the project.
Delivered over six stages, there’s also a new residential development at Macarthur Heights, which will deliver 950 homes over 122ha in Campbelltown in partnership with UrbanGrowth NSW.
Coronation Property has also sold more than 60 per cent of its 346 studio, one, two and three-bedroom apartments in its Western Sydney Mason & Main project, located in Merrylands.
Prolific private builder and developer Deicorp has stepped up its focus on Sydney’s western suburbs, filing plans for twin 46-storey mixed-use towers—its third major move in the area in less than 12 months.
And Western Sydney developer Aland also has a number of projects under way across the suburbs of Parramatta, Schofields, Merrylands and Campbelltown.
The developer has also sold 80 per cent of its $170-million Carson on the Park development (pictured in the main image) at 12 Carson Lane at St Marys, with construction expected to wrap up at the end of 2023.
While the developer admits it’s a challenged environment, it is better equipped to manage pressures being a builder/developer.
Aland chief executive George Tadrosse says investors and first-home buyers have shown particular interest in the development.
“St Marys is expected to undergo a big transformation with several major infrastructure projects across civic facilities, health, retail and transport, including the highly anticipated Western Sydney International Airport, all due to be completed within the next few years,” he says.
Aland founder and director Andrew Hrsto says: “We understand the urgency of the housing crisis in NSW and, wherever possible, have taken a proactive approach to accelerate our developments to help address this issue.”
Western Sydney’s Ray White Commercial managing director, Peter Vines, says the opportunity for developers to buy land with favourable terms is appealing for many.
“We’re seeing a lot of developers negotiate terms that include prolonged settlement periods and deals that are subject to DA approvals,” Vines says.
“We also know that industrial land sellers in this market are keen to maintain strong values so they will consider these sorts of contractual arrangements, which allow developers to de-risk investments in land projects.”
He adds that land prices have reduced given the increased cost of capital, softening yields and construction costs.
“We also know land financing is becoming more difficult in the current climate. So, for more sophisticated investors, industrial assets in Greater Western Sydney are certainly something that is valuable,” Vines says.
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