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Mega development sites are the hot ticket for investors

754 Pacific Highway, Chatswood, is on the market with parking for 90 cars and a site area of 2040 sq m, with price expectations of $25 million. Photo: supplied The project, Oro, at 141 Allen Street, in Sydney’s Leichhardt, has been five years in the making, amid an affordability crisis. Photo: supplied
SuZhou Night Recruitment

Development sites are generating significant interest with investors who want to take advantage of the increasing demand for residential and commercial property opportunities.

Some of these are now being sold as mega sites, which allows the developer to offer a range of mixed-use services on one site.

According to Bennett Wulff​, national director and director in charge of Charter Keck Cramer’s Sydney office, a trend of “mega site” sales has emerged, underpinned by buoyant market conditions and supported by factors including state and local government planning initiatives as well as the increasing activity of offshore – particularly Chinese – developers with the appetite and capacity to deliver projects of such scale.

“Large-scale projects in favourable locations continue to sell strongly off the plan. Recent increases in development activity have still not met underlying dwelling requirements,” Mr Wulff said.

“Since 2014, a total of 50 residential development sites transacted throughout the Sydney metropolitan area at price points each exceeding $100 million, equating to a cumulative land price of over $9.4 billion and an average site sale price of about $189 million.”

There are currently two being offered, one at Leichhardt in Sydney’s inner west which is earmarked for residential and another at Chatswood, worth about $25 million for retail, commercial or mixed-use developments, subject to council approval.

After a five-year approval process, the 7149 square metre residential development site at 141 Allen St, Leichhardt, is for sale through Guillaume Volz, Ryan Bennetts and Zhenni Lu of Colliers International on behalf of a private family investment group.

The site received development consent in October last year for a staged development application comprising construction of six residential flat buildings between four and six storeys above basement level comprising 139 units, and associated works, including basement parking for 124 vehicles.

According to Mr Volz​, national director, development sites, residential at Colliers International, while the market and government have responded to Sydney’s undersupply in mass development areas, such as Olympic Park and the Parramatta Road corridor, “core suburbs such as Leichhardt continue to be ignored, despite the inherent attraction and desire from buyers for apartments in these neighbourhoods”.

Mr Bennetts, associate director, development sites, residential at Colliers International, said the development approval is extremely efficient allowing for only a single-level basement, “while also benefiting from the elevated position that provides 3600 views to the Sydney CBD and Harbour”.

Mr Bennetts said the vendor’s representative, Irving Washington, acknowledged that significant value had been added to the property via the development approval process and given the group’s interest elsewhere, the owners have now decided to sell.

On the north shore, the site at 754 Pacific Highway, Chatswood, has a net lettable area of 3825 sq m and parking for 90 cars.

Selling agents Henry Burke, of Colliers International, and Hugh Anderson, of Sutton Anderson, said there had been a rise in demand for freehold sites and they expected this trend to continue well into 2017.

They said the sales campaign was in the wake of strong results for similar freeholds sold in 2016, which included record sales results for 282-284 Victoria Avenue for $46.25 million, being a net yield of 3.9 per cent and a rate per square metre of $8300, 15 Help Street for $43.8 million on a net yield of 5.62 per cent and The Zenith Centre by DEXUS and GPT to Centuria and Blackrock for $279 million.

“754 Pacific Highway is a perfect investment opportunity, with the asset being close to Chatswood transport Interchange, Chatswood’s retail core and has the added bonus of providing multiple value-add opportunities,” Mr Burke said.

According to Hugh Anderson, director Sutton Anderson, “Chatswood is Sydney Metro’s largest and most energetic mixed-use centre with a cohesive mix of commercial, retail, residential and lifestyle developments.

“It has everything: excellent transport, world-class amenity, hotels, restaurants, cafes, a centre for the arts and fantastic parks and lifestyle elements,” Mr Anderson said.

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