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Sydney’s North Shore property market rides high

Sydney’s North Shore has been one of the more active in 2014, with sales of more than $1 billion of property across all sectors, with office and leasing on the upward trajectory.
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Demand for investment-grade properties by overseas investors and the conversion of older offices to apartments are the triggers for the improved fundamentals.

Setting the trend was the TIAA Henderson acquisition of a 50 per cent interest in 101 Miller Street and Greenwood Plaza for $310 million last month.

Rob Sewell and Simon Rooney of JLL & CBRE, TIAA Henderson Real Estate, who advised on the sale said it was further evidence of the acceptance of North Sydney as a key investment destination by offshore investors.

Other deals included Suntec REIT’s purchase of the office development at 177 Pacific Highway for $413.19 million and the acquisition of Northpoint Tower by South African REIT, Redefine Properties Limited and Cromwell Property Group for $278.7 million.

“The fundamentals for North Sydney are showing good buying opportunities. Vacancy rates for premium and A-Grade assets is currently tight at 5.8 per cent and yield spreads between the CBD and North Sydney is wider than historical benchmarks,” Mr Sewell said.

Another was by the property investment, development and advisory firm Marprop which bought 2 Elizabeth Plaza in the centre of North Sydney CBD for about $45 million.

Marprop managing director James Marshall said the acquisition aligns with the company’s strategy targeting specific markets and assets with opportunities to create value for investors.

Further afield, deals for industrial and mixed use properties in Macquarie Park/North Ryde and Chatswood, have been strong.

The region has also been boosted by the $440 million upgrade of AMP Capital’s Macquarie Park shopping centre, which opened last month.

Knight Frank’s director, commercial sales, Tyler Talbot, said foreign capital continues to underpin investment activity, accounting for around 50 per cent of sales across the North Shore and North Ryde markets since the beginning of 2014.

“This competitive environment, coupled with limited stock availability has resulted in yield compression for both prime and secondary assets across the North Shore/North Ryde market,’ Mr Talbot said.

“With demand from both domestic and global capital expected to remain high, it is likely that buyer depth will remain solid, placing further downward pressure on yields.”

Knight Frank’s analyst, research and consulting, Luke Crawford said that with business conditions starting to improve in NSW, the early stages of improving leasing activity are anticipated to steadily gain some momentum into 2015.

“A steady improvement in full-time employment growth is central to this outlook. Over the past 12 months, just over 90 per cent of employment growth in NSW has come from full-time jobs, which is a sign of firms making longer term decisions and provides a solid base for growth in tenant demand”.

In North Sydney, the prime leasing market in North Sydney is once again continuing to tighten, with vacancies reducing from 5.1 per cent to 4.7 per cent in 2014.

According to Knight Frank’s director, office leasing, North Shore, Giuseppe Ruberto, the strong rental outperformance during the last three years in the North Sydney market, particularly when compared to the CBD, has resulted in some tenant leakage to the CBD.

“These include Symantec, although there remains sufficient demand in the market to offset this and as a result, a number of incoming tenants such as Jemena of 5,600 square metres, Sony (2,400sqm) and Boral (1,900sqm) will offset some departures and maintain the relatively tight prime market,” he said.

“We are seeing a particularly strong turnaround in Macquarie Park/North Ryde in recent months on the back of several large leasing deals. Vacancy rates deteriorated from 7.1 per cent to 11.2 per cent over the two years to July 2014; however in light of the recent deals, we are now forecasting vacancy rates to reduce to around 8.5 per cent by July 2016.

This story Administrator ready to work first appeared on Nanjing Night Net.

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