Market Research Sydney North West
Across the North West sector, LandMark White is monitoring 163,607 sq m of new supply projects, this represents 11.17% of the total development pipeline for the Sydney metropolitan area. Just over 100,000 sq m of this stock has DA Approval while the remainder is within early planning phases (no projects currently under construction), the bulk of potential supply is located within the Baulkham Hills LGA. Average rentals for this region have remained stagnant for the past 18 months, currently achieving an average net face rent of $280/sq m or gross face at approximately $340/sq m.
On the investment side, prime assets are achieving yields between 8.50% and 9.50%, indicative yields have grown more than 100 basis points in the last 18 months due to the affects of the global financial crisis. Investment activity in the over $5 million price bracket has been limited as an inability to borrow and reluctance by investors to accept lower values has plagued most suburban office markets.
Retail
The retail market has been under increased pressure across all regions of Sydney. Any supply projects have been put on hold as retail spending levels have reduced, for the North region 126,008 sq m of supply projects are in the pipeline however not within the Baulkham Hills LGA. This region has seen a few large completions in recent times including Rouse Hill Town Centre and Kellyville Neighbourhood Centre, it is likely that any more completions will be dependant on residential development and will be local convenience based shopping. Within these centres, specialty stores have been under increased pressure with turnover levels falling, this has resulted in centres having to reduce their rents to retain these tenancies. Across Neighbourhood centres rents range between $500/sq m and $1,000/sq m (as at March 2010), while yields have consolidated to range between 8.00% and 9.00%. Evident in this location is Bulky Goods retailing, this sector has been hit by reduced activity and increased competition in recent years, this has resulted in average net face rents falling more than 18% in the last year to range $150/sq m to $300/sq m, similarly average yields have also been stressed to now range between 8.50% to 9.75% for prime assets, up from 6.75% to 8.25% during 2007.
Industrial
The Baulkham Hills LGA sits within LandMark White’s North industrial region. This region is middle range in terms of new supply, currently there is 246,340 sq m earmarked for development across the region, ie 13.24% of the total Sydney supply pipeline. The bulk of this supply however is not within the Baulkham Hills LGA, over the past five years development in this region has moved away from traditional industrial property providing greater volumes of office or high tech accommodation particularly as the availability and price of land increased. Across this greater region 137,113 sq m is DA approved with the remainder in early planning stages. Average net face rents across this region sit at $177/sq m (March 2010), this rate is slightly down over the last two years, and like all Sydney locations incentives continue to play a part due to the uncertainty surrounding the economic environment. With vacancy continuing as a problem for this market, effective rents have been squeezed with the smaller industrial unit market being particularly badly affected. On the yields side and average of between 8.25% and 9.25% is in stark contrast to the rates of 6.75% to 8.00% recorded in 2007 and much of 2008.
Residential
The Baulkham Hills housing market has outperformed the Sydney residential market over the last year. Volumes have improved during the 2010 calendar year with 3,354 sales recorded compared to 3,096 in 2009 and 2,151 in 2008. The median house price has been showing a clear growth upwards since March 2009 where the median price fell from the previous high of $598,000 in September 2007. Currently the median house price is $702,596 which shows an annual growth rate of 6.45%. The unit market has shown greater volatility in median price, currently $445,218 which represents 2.11% growth in the last year.
Rents across the Baulkham Hills LGA have grown significantly in the last year according to the Department of Housing, with two bedroom houses currently achieving $400/week in March 2011, representing 14.3% annual growth, similarly, three bedroom houses achieve $480/week showing 9.1% growth over last year. Two bedroom units have resulted in only 5.1% growth over the year to $410/week. The overall vacancy for Outer Sydney is recorded at 1.2% in March 2011 slightly above the 1.1% Sydney average , this rate has remained relatively consistent over the last three years.
Hotels
Data from the Australian Bureau of Statistics for December 2010, show that the Sydney Tourism Region currently has 292 hotel/motels/serviced apartments (over 15 rooms) this equates to 32,867 accommodation rooms. Data for the quarter show occupancy of 82.1% with an average daily room rate of $173.96. Over the past six years room nights available have remained relatively constant at approximately 3 million per quarter. Annual occupancy has been recorded at 79.25% in the 2010 calendar year the highest rate recorded in our data. The annual average daily room rate is also showing strong result at $161.17 however this is still 3.33% less than the 2008 high of $166.72. Considering occupancy and daily room rates, the RevPar (revenue per available room) currently is $127.73, which is the highest rate on record.
For the Baulkham Hills LGA, there are only 3 establishments recorded in December 2010 representing 311 rooms, occupancy for this quarter was 73.8% and the average daily room rate was recorded at $147.52 with RevPar of $108.87.
