North Sydney Development Sites Diversity & Quality
A broad description of Sydney’s North Shore is a spine of attractive and varied suburbs running in a ribbon that zig-zags along the Pacific Highway from the North Sydney CBD and Kirribilli to Hornsby.
This description might be passable as a compass setting, but it defies the diversity and quality of the North Shore as a market that has an entire range of appealing features.
This market boasts a range of development opportunities that clearly amplify why the North Shore demonstrates a varied combination of demographics and growth potential that continues to attract both strong buyer and developer attention.
Uniquely among many regions across Greater Sydney the North Shore exhibits why this area deserves its reputation as home to many of Sydney’s most liveable suburbs and communities and all are anchored by some pretty impressive credentials that enable developments to secure attractive end-user prices.
North Shore development sites are varied, demonstrated by sites as diverse as Neutral Bay, St Ives and Willoughby. All are classic examples of a potential demand that clearly defines their development value and appeal.
Neutral Bay like two other locations in Waverton and Cammeray involved the sale of existing strata buildings in one line for re-development. Sales that capitalised on the scarcity of available development land on the Lower North Shore.
Buyer demand is underpinning the re-development viability of underutilised buildings or adjoining house lots into sites for new projects. These sites are ideally suited to construct luxury boutique developments, that are in high demand.
These sales mirror a trend towards owner groups consolidating and selling in-one-line to residential developers to capitalise on growing demand for new projects in key North Shore locations and emphasise the scarcity of suitable sites.
Apartment sales are then being driven by strong buyer demand for the end projects. Mainly ‘right-size’ buyers looking to stay on the North Shore, in exchange for quality and larger apartments or townhouses.
The geography of the North Shore also means that these developments are spread across the region and so they avoid possible over-density by being concentrated into one area. This trend is also helped along by the area’s ‘ribbon’ of rail and road transport links and attractive strip shopping.
The North Shore currently has limited new residential sites coming to market and this is creating an opportunity to capitalise on the potential of continued strong demand. The majority of purchasers being locals opting for premium apartment living aligned to their local community.
From a marketing and development perspective and clearly for buyers, high-demand development sites need to deliver the perfect mix of location, product quality, easy access, amenity (in particular schools and hospitals) public transport, retail and open space.
Quality North Shore sites that can offer these unique points of difference, ensure a combination that will deliver appealing price levels for new projects and also sustain demand across future development sites.
This is significant because future developments will tend to be straddle across several years. This is a key factor in the appeal of the former Channel Nine site at Willoughby – Willoughby Parkside Sydney, is in a highly sought-after, competitive and successful market of considerable depth and potential.
The 29,721 sqm master planned site, which is just 5.9kms from the Sydney CBD, currently includes 460 apartments across nine buildings focused around a contemporary village style community. Willoughby is a blue chip Lower North Shore location underpinned by key services and amenity.
Apartment Supply Set to Decline
The site is on-market at a time when Sydney’s construction rates are predicted to rapidly fall. Supply of new apartments in Greater Sydney is forecast (Source: Charter Keck Cramer) to drop significantly from 29,200 completions in 2018 to 9,200 completions in 2021. Willoughby is further constrained with minimal supply and strong demand. While, in terms of new releases the same forecast indicates that the numbers will fall 50% from 33,000 in 2017 to just 16,000 in 2018, the lowest level since 2012.
The qualities of the Willoughby Parkside Sydney master plan have always appealed to local home-buyers. They are equally seductive as other areas on the North Shore that are now ripe for re-developed with medium-density, mainly high-end apartments and boutique townhouses.
The trend is creating added value for existing owners, both apartment buildings and detached homes where a joint sale will help deliver the greatest site value, accommodating the demand for more supply.
Much of the demand in particular on the lower North Shore is also being driven by the current resurgence of the North Sydney CBD with pending moves of the NBN, US Consulate, Channel Nine and the new Sydney Metro station.
Value Driven Opportunity
In the wider context there’s a combination of reasons why all prime North Shore sites are attracting high values, even at a time when the apartment market has lost some of its recent shine.
Waverton for example is another notable area where diversity is demonstrated by the potential for large up-market townhouses. Waverton’s attributes include Waverton Village and Station, easy access to Shore School, North Sydney CBD, Waverton Park and the future Sydney Metro Station plus, quick access to the Pacific Highway.
When dealing with developments, that often take years to deliver the end product, the impact of planning policy and demographic shifts are critical. On the North Shore and partly as a result of these two key trends, there is virtually no availability of large-scale brownfield sites or greenfield sites. The focus is on selective infill sites that have the potential for the end product to appeal to an increasingly selective pool of buyers.
However, demand for infill sites is varied and can include commercial re-development sites such as St Leonards, Crows Nest, North Sydney, Milsons Point and Chatswood.
Demand will be driven by the mounting evidence that by 2021-22, Sydney will once again face a shortage of new apartments, leading to an undersupply of new stock and renewed up-ward pressure on prices.
This trend will be even more pronounced on the North Shore where sites are already in short supply. While there is some down-ward pressure on the value of very large sites beyond the North Shore, and even more so when there are planning issues involved the North Shore remains exceptional.
This is graphically illustrated by the fact that there’s only one available master-planned site available and Willoughby Parkside Sydney may well be the only such site for a decade. The pending fall in supply will also be marked by the emergence of a new style apartment project. Demand is moving away from very large-scale high-rise developments to more neighbourhood and community focused projects along with staged smaller and bespoke style projects.
These are all markets that are ideally matched to demand profiles on the North Shore. As such the North Shore will continue to see strong support for quality sites and importantly across a variety of sizes. The trends will be accelerated by the prospect for the production of new stock now starting to look very limited.
Professional developers with a solid track-record, with a firm knowledge of the market are still active but most have moved to a different delivery model.
This is happening while the localised supply of development sites is always limited, and this will in future lead to far less finished product on the market.
Popular Sites are in High Demand
With little demand or availability of brownfield sites and even less for greenfield sites, the main sales activity and demand is for infill sites in prime well-established locations and unique one-off sites like Willoughby Parkside Sydney.
And while demand is cautious because of the settings surrounding the end sales, there’s strong buyer support for well-located sites.
There have been a number of sales that clearly show this trend, and these include sites as diverse as Neutral Bay and St Ives and all are high-demand and popular suburbs.
The Impact of Falling Apartment Supply
While there’s been a very big increase of new apartments over the past 5 plus-years and some projects are yet to complete, the next 3-years look very different, and the shift in demand for development sites will play a critical part in how much supply is limited beyond 2020-22.
The Greater Sydney apartment market is rapidly slowing and in 2018 numbers fell to their lowest point since 2012, the impact of this drop is expected to bite with the decline in new projects evident in 2020-2022.
Currently the most active buyers for development sites are experienced groups concentrating on prime and easily deliverable sites with the potential to deliver new stock as new projects slow.
North Shore demand is expected to remain concentrated on meeting the areas demand for quality projects and this trend will be re-shaped between 2020-22 with the potential slump in supply stimulating site demand.
Prime locations will be perfectly timed to capture what is then expected to be a rising market however, prime sites on the North Shore are expected to remain rare and in demand.