Sydney CBD apartments market surges
The inner heart of Sydney and its surrounding suburbs are bucking the trend of a decline in the values of residential property with the median price rising by as much as 34 per cent in the final quarter of 2010, according to Colliers International.
The rise is in contrast to greater Sydney's local government area where the median apartment price declined by 2.9 per cent in the same period.
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The inaugural Colliers International Sydney Apartment Research & Forecast Report took into account 178 new and established apartment sales in the northern, mid, eastern and southern CBD precincts, with the east recording the highest number of sales (84), followed by the south (74).
The median price of an apartment in the 'east' precinct rose from $485,000 in the third quarter of 2010 to $650,000 in the fourth quarter.
Similarly mid CBD, bounded by Market and Bathurst Streets and the western edge of Hyde Park, rose from $472,000 to $582,500 over the same period.
Only the southern CBD precinct, largely comprising Chippendale and Haymarket, did prices fall slightly, slipping from $594,500 to $547,000.
Ariel Pollard, Colliers International director of research – residential, said the decline was not a reflection of demand in the south, but of smaller purchasing opportunities afforded to the market.
"I expect this trend will be reversed as sales in new developments such as Central Park and INMARK Tower settle with rates being achieved at about $8,500 per square metre," she said.
Peter Chittenden, Colliers International managing director of residential, said metropolitan Sydney's property fundamentals remain sound as demand continues to outpace supply.
"New supply levels have been impacted upon over the last few years due to the global financial crisis, and the subsequent issues surrounding development funding," he said.
"The decline in supply levels has resulted in pent-up demand and only recently developers have sought to gain approval as market conditions are favourable."
Colliers International has identified 22 projects, equating to a minimum of 4,291 apartments, in various stages of the planning system or development within the Sydney CBD and surrounding suburbs.
"Once the Stamford Residences and The Reynell Terraces are completed new developments will effectively grind to a halt until 2015, when development approval is expected for a number of projects.
"Due to this, developers will continue to investigate the highest and best use of each site on its own merits.
“Instead of older-style commercial buildings being refurbished for commercial use, developers will continue to consider if a residential use will result in higher development returns, like we have seen with Valad Property Group's Goldfield House and Mirvac and AMP Capital Investor's Coca-Cola Amatil building.”
Underpinned by traditional property fundamentals, the values of apartments in the Sydney CBD are expected to continue to rise, Mr Chittenden said.