[+] Sydney’s Hottest Suburbs for New Apartments

Finding an equilibrium between expenditure and return, creating projects that actually stack up, has rarely been harder that it is in the current climate. As developers struggle to avoid the tipping point in this balancing act, the location of a project has become even more crucial than it perhaps was in the past. So, it is no surprise that the search for “the next big thing” for locations is intense—and sparking rivalries. A focus on the fundamentals of a locale—population growth, available sites, and local planning regulations—can deliver the data developers need to move ahead. As a result, a handful of Sydney suburbs are emerging from the pack, attracting interest and development. Location, location, location Deicorp executive manager Rob Furolo says the prolific developer looks for specific qualities when choosing a location for apartment development—convenience, value and quality of life. “That’s why we place such a high priority on transport-connected sites,” he says. “Evidence suggests properties located on or close to transport grow at a faster rate than comparable properties further out.” Its Zetland project unveiled this month is an example —400m from the Green Square station and one of the biggest urban renewal areas in Australia. ▲ Deicorp ’ s Zetland project will deliver 574 apartments in the Green Square renewal area. A focus on transport in Sydney, of course, makes sense and even the state government has caught on, introducing and expanding its transport-oriented development (TOD) areas and encouraging higher-density, “missing middle” development. “The Tier 1 TOD sites identified by the NSW Government for accelerated rezoning have the most appeal for projects Deicorp will likely undertake,” Furolo says. “We will explore opportunities in the eight transport hubs designated as Tier 1 TOD sites, which will include locations where we already have projects, including Crows Nest and along the North West Metro line.” This type of development also leans towards scaleability and affordability—compared to Eastern Sydney’s high-end boutique apartments. Getting these projects to stack up has proved tricky considering construction costs, but there are certain areas of Sydney where it is more feasible. The NAB’s latest report on Greater Western Sydney says that the region is expected to grow by 25 per cent to 3.2 million over the next decade. It is aleady home to half of Sydney’s population. ▲ Penrith is among the Greater Western Sydney areas experiencing big growth. The region is also likely to absorb two-thirds of the city’s population growth during the next 20 years. And these are not just commuter suburbs on the far reaches of the CBD. In terms of employment, NAB found, the region produces 31 per cent of Sydney’s gross regional product. Lending to businesses in the region grew 9.9 per cent year-on-year, compared to 7.1 per cent for NSW as a whole, indicating an increased level of startups and growing businesses. The data highlighted Hawkesbury, Sutherland and Lithgow as growing areas for businesses. Infrastructure is also causing a developer gold rush. Around the new Western Sydney Airport at Badgerys Creek 35,000 jobs are predcited to be created when the airport opens in 2026. Infrastructure projects are increasing commercial viability of these suburbs, with projects such as the WestConnex tunnel as well as four-lane upgrade to the M12 tipped to have a big impact on buyer interest. Affordability is king Affordability, for buyers and developers, is not something many eastern Sydney suburbs can be accused of, but it is proving a major focus of governments, whether developers can make it stack up or not. “Affordability is the key for new projects in this market. Projects have to be feasible to develop and affordable to purchase,” Furolo says. This sweet spot can prove difficult for suburbs that traditionally return lower average home sales. However, according to the NAB data, Auburn and Blacktown delivered the highest residential house value increases, 16.1 per cent and 15.3 per cent, and it is expected that apartments will follow, although not at the same rate. Charter Keck Cramer national executive director for research Richard Temlett speaking at The Urban Developer Sydney Residential Summit this year said that it was no surprise that 2023 was “one of the hardest years on record for the build-to-sell market”. “Apartments launched for sale and complete are at decade lows, which is especially worrying given that we have record population growth [the biggest] since the 1950s,” he said. ▲ Major greenfield development is happening in places such as Oran Park and Gledswood Hills, which could in future include apartments. But with an awareness of the issues is coming action. “Sydney is better than Melbourne in trying to mobilise supply, and there are significant opportunities with overseas migrants targeting Sydney who often go straight into the apartment market. “Over the next four to seven years, this is your target market, so it’s time to start lining up the types of dwellings they will go into.” The “build it and they will come approach” does not always work, but it seems it does in Sydney, with rents in places such as Zetland responding to this uptick in population. In some places, potentially the likes of Macquarie Park, he said, there was not necessarily major rental growth. “But Parramatta [for example] is starved of supply.” The NAB report also highlighted Parramatta as a residential market that “looks set for continued strength for years to come”. ▲ Major commercial centres Parramatta, Penrith, Liverpool, Blacktown and Norwest are growing hubs of business activity. But it’s not just the more established suburbs that could fare well. Penrith Lakes, also known as Western Sydney Lakes, “shone”, according to the NAB. “Transaction volumes remain elevated too with Campbelltown and the Macarthur region standing out, but property continues to be highly sought after across GWS,” the report said. So while high-end development and developers will retain their place in the market, the Western Sydney suburbs where more affordable apartment product can be achieved will be highly sought after, and keeping an eye on infrastructure and population growth will be key to positioning apartment projects in the years to come. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Sydney’s Hottest Suburbs for New Apartments

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