Castle Hill Sale Press Release and Market Commentary – Jan 2019
Colliers International has sold one of Sydney’s largest site amalgamations for 2018 for circa $40m, proving that despite multiple headwinds during 2018 there is still life in the market.
The site located within the Showground Precinct at Carrington Rd, Castle Hill was rezoned in February 2018 ahead of the opening of the Sydney Metro North West Metro in May this year. The sites are the amalgamation of 11 properties with a total site area of 9,634sqm, with the developer looking to use the newly approved controls to develop a multi-stage development of circa 300 apartments in midrise buildings up to 12 storeys high.
The purchaser, local developer Ecospective, saw the timing right to secure a deal on the right terms. “Fundamentally we are very confident in the Sydney Residential Market,” disclosed a company representative. “We see enormous potential in Castle Hill. With the opening of the Sydney Metro North West imminent, residents will very quickly realise how dramatically the Metro will upgrade transportation, improve retail, bring employment and provide better access to education.”
Selling agent, Guillaume Volz, Colliers International, National Director, Developments Sites – Residential, says the sale “Demonstrates the market has a pulse following a very cautious 2018 that saw a fog fall across the market with greatly reduced sales activity and a difficult trading environment. Sensible developers held off buying towards the end of the peak, waiting for buying opportunities that are now appearing.” He added that “Notwithstanding, supply had significantly improved in Sydney, the difficult lending environment both at the private and business level is going to severely impact supply in the short term with many developments likely to experience delays in commencement. We see astute buyers looking beyond the current activity to replenish their shelves ahead of improving sales conditions in late 2019.”
The belief is supported by Bennett Wulff, NSW Director of Charter Keck Cramer, who have analyzed Sydney forecast supply in detail. “Based upon current population projections, Metropolitan Sydney requires approximately 36,000 new dwellings to be completed every year until 2036, of which approximately 27,000 dwellings (75%) are intended to be infill and therefore predominantly apartments. Whilst this target was achieved in 2018 and is anticipated to be met in 2019, our research is indicating a decline in apartment completions to circa 23,700 in 2020. It is important to note however that approximately 38% (9,100) of the units comprised within this figure are not yet under construction nor underwritten by construction finance. This figure is therefore subject to downward revision should projects not achieve the necessary sales pre-commitments and accordingly fail to obtain construction funding; both of which remain difficult in the current environment. Our current 2021 forecast is indicating a further reduction in completions. Looking ahead, should completions consistently fall short of implied dwelling demand, supply shortages will take effect quickly.”