- Industrial land in Sydney’s south is in hot demand, with a recent surge in sales driven by a desire for infill locations
- In May alone, demand from owner-occupiers and investors resulted in $15 million worth of pre-sales in a single development
- Land prices in the South Sydney market have surged over the last five years, according to Knight Frank, up 127 per cent
- CBRE’s William Gathercole said investors are chasing the five per cent yields that industrial property can offer.
The South Sydney industrial market is hotly contested as one of the most attractive infill locations in the country, with pent up demand sending sales surging.
In May alone, demand from owner-occupiers and investors resulted in $15 million worth of pre-sales in a single development.
The Precinct 45 project in Banksmeadow, a Ramsey Property Group development with 57 units ranging from 40sqm to 322sqm across different workplace and industrial zones, notched up the sales.
Sales in May amounted to 35 per cent of the available stock at the precinct, with more than 85 per cent of it sold before the end of the year, when work at 45 Green Street is expected to be completed.
At Precinct 45, owner-occupiers outweigh investor purchasers three to two, with one 100sqm warehouse, picked up for $8780/sqm.
Industrial strata within an eight-kilometre radius of the Sydney CBD and Port Botany are in high demand, because of an increase in e-commerce and last-mile deliveries, according to CBRE head of South Sydney Industrial William Gathercole.
“Coming out of the uncertainty of 2020, owner occupiers and investors alike are looking for value,” he said.
“I’ve never seen the industrial strata market this buoyant in South Sydney, and we expect this surge to continue due to the low-interest-rate environment and limited amount of industrial supply available.
“Owner occupiers are purchasing rather than leasing as it is now cheaper to buy than rent, and buying also opens up repositioning and investment opportunities down the track.”
Mr Gathercole said investors are chasing the five per cent yields that industrial property can offer.
“In comparison to the 2 per cent you may achieve when investing in residential, while the lack of supply in South Sydney means it’s easy to find tenants even as rents continue to rise,” he said.
Land prices in the South Sydney market have surged over the last five years, according to Knight Frank.
With the scarcity of sizeable landholdings and increased demand, prices for small lot sizes have grown 127 per cent over the last five years.
Over the last decade, growth of nearly 200 per cent has been recorded, higher than any other precinct.
Knight Frank’s Urban Logistics report said that South Sydney land values are priced at over a 300 per cent premium compared to the Western Sydney precincts.
The debut of Made Property’s Base Alexandria development, which is located opposite Sydney Park and the new WestConnex at 106-110 Euston Road, will be the next test of the South Sydney market.
Mr Gathercole and CBRE colleagues Isabel Ross and Fergus Bowen are managing the sales campaign.
“The strata market is booming at the moment, with the increase in e-commerce and demand for small and medium warehouses located close to the Sydney’s CBD, airport and port,” Ms Ross said.
“With developments such as WestConnex, South Sydney is now better connected to the rest of Sydney than ever before.
“Small businesses are looking to re-establish themselves and the lack of industrial land in South Sydney means Base Alexandria is set to be one of the last, brand-new strata opportunities for owner occupiers.”