Why Decode is Betting Big on Newcastle’s Next Growth Wave

Newcastle is booming and contractor Decode Group is positioning itself to leverage the city’s growth. The Tier 2 city is working hard to shake off its industrial past and lean into its future as a livable, higher-density regional capital. Population growth is forecast to increase 21.24 per cent between 2021 and 2046, adding nearly 36,000 people in two decades, and targeting 11,100 completed homes by 2029, almost double the forecasts under the Hunter Regional Plan 2041. And with the recommendation from Infrastructure Australia to prioritise the Newcastle-to-Sydney section of the high-speed rail project, the city is a step closer to a one-hour commute to the state’s capital. ▲ Decode was appointed to the Dairy Farmers Towers in 2023. Sydney-based, iCIRT-rated builder Decode Group saw the indicators early enough to make its move. The $320-million-turnover company is currently delivering Third.i’s $120-million, 191-apartment Dairy Farmers Towers in Newcastle West, and its $150-million Merewether Golf Club over-55s project in Adamstown. Decode opened a Newcastle office in 2024 to support those projects and is now making its strategic move permanent, Decode associate director Ali Mobarak says. It was a gamble in a sector where margins are already tight and its competitors remain risk-averse. “But there is a perception shift about Newcastle. It’s gone from an old mining and coal town to a trendy tourist hotspot with growing amenities and diversified employers,” Mobarak says. “The city has changed in recent years, and we now consider Newcastle as an area of opportunity.” The opportunity Decode is not taking a “build it and they will come” approach, which has been the downfall of other overheated regional booms. For Decode, the fundamentals are already well-established. “Things like the light rail and the city revitalisation programs are making the city more attractive,” Mobarak says. “And more people now are moving from Sydney to Newcastle for affordability and lifestyle, and especially with the flexibility to work from home.” According to Budget Direct, rental prices in Sydney are 53.91 per cent higher than in Newcastle, and local purchasing power is materially stronger in Newcastle. ▲ This year, Dexus signed on as a partner at the Merewether Residences. This is translating to real movement in the market. Residential vacancy rates are low, with the latest figures from SQM Research putting them at 0.9 per cent for the Hunter region, indicating a tight rental market with high demand. Developers are increasingly on the bandwagon—Urban Property Group is planning what would be Newcastle’s tallest towers at 39 storeys that includes co-living as well as market apartments. Decode has seen this demand firsthand with the Third.i projects, which have just begun construction but are already 80 per cent sold. “There is already, and there is going to be, more strong demand for high-density residential developments and senior living in Newcastle,” Mobarak says. On the commercial side, Cushman &amp; Wakefield recently sold 528-534 Hunter Street for $9 million. Cushman &amp; Wakefield manager, investment sales, Jake Smith says that is recognition of the “long-term fundamentals of Newcastle’s West End”, highlighting its connectivity and ongoing infrastructure investment. Difficulties of affordability But Newcastle shares the same national pressure points as every major growth market; delivering homes fast enough and at a price point that stacks up. While Sydney is on track to hit the “unthinkable” milestone of a $2-million median house price by the end of 2026, Newcastle is around $931,250, still expensive, but not compared to its big brother to the south. “High construction costs combined with vacancy rates below 2 per cent generally and very strong demand ... it’s all pushing the prices up,” Mobarak says. “Building affordable housing is just a bit difficult at the moment.” This is impacting the delivery pipeline. According to the City of Newcastle, there are currently more than 2000 homes approved but not built. ▲ Decode associate director Ali Mobarak: More people now are moving from Sydney to Newcastle for affordability and lifestyle. There are issues more specific to Newcastle and the wider Hunter region such as flooding that adds to building resilience requirements, and even greater wind analysis for projects in the Steel City compared to other centres, Mobarak says. “These things add to the cost of design for the consultants and builders as well.” But there could be light at the end of the tunnel. Planning reform and fast-tracking, not only through the NSW Housing Delivery Authority but also the City of Newcastle’s own Accelerated Development Application System, is aimed at improving efficiency. “Accelerated DA processes mean there should be more projects and growth which is great to hear,” Mobarak says. “And construction costs are stabilising a little bit, although labour is one of the highest increasing costs now in construction. “In this region, supply chains are improving and while margins are tight, the market is now cautiously optimistic.” At the end of the day, this means that projects are easier to price now, he says, which will serve to get things moving. Subcontractor challenge Another problem that materially impacts pace and scalability was identifying the right subcontractors. “We thought it might be a bigger challenge to establish this subcontractor network in Newcastle, because we already have a preferred or trusted subcontractor list in Sydney,” Mobarak says. “For all our projects, I only introduce new players if I have to. “Some of our subcontractors and consultants have already established a presence in Newcastle through local teams who actually work in Newcastle. “But we will always explore opportunities to build relationships and engage with local subcontractors.” ▲ A rendering of the tower proposed by Urban Property Group, who is seeking to more than double the maximum height limits for the Wickham site. But scaling local capability to match project size is still a friction point. “While we can’t have a subcontractor whose team comes every day from Sydney, because it’s just not sustainable, sometimes the local subcontractors are not equipped for the size of these projects.” So as Newcastle moves towards a higher-density future, the role of the likes of major contractors like Decode will be more important. The council said it has spent the past decade laying the groundwork for future growth and planning for higher density living, but the new National Housing Accord targets compress 62 per cent of the previous 20-year target into just five years. In October, the council lamented that these targets were “disproportionately front-loading delivery expectations” and “extremely unlikely” without a “significant injection” of infrastructure by the state government. ▲ A rendering of the Broadmeadow project that could house 40,000 residents. It highlighted the Broadmeadow Place Strategy, which went on public consultation last year , that has the potential to deliver 20,000 new homes in the area. While these targets might pose a challenge to the local and state government, they could offer a major opportunity for developers and builders, with councils under pressure to smooth the way for development. “The biggest opportunities will be low-density housing, medium-density housing, probably townhouses and retirement living,” Mobarak says—especially with 21 per cent of the Newcastle area population currently aged over 60. With a $1.4-billion pipeline currently, Decode—whose chief executive officer Divya Mehta won the Women’s Leader Award at The Urban Developer’ s 2025 Urban Leader Awards—is not short of work. But the Newcastle investment marks a step forward in its strategy. “Expansion to Newcastle aligns with our broader strategy of strategic growth in high potential regional markets,” Mobarak says. “We don’t want to do any job. We want to do the right job and the intention now is to focus on Newcastle, where there are so many opportunities for everyone.”

Why Decode is Betting Big on Newcastle’s Next Growth Wave

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