Apartment investors sharpen focus on fast-growing outer Sydney

Investor interest in off-the-plan apartments in Western Sydney is on the rise, with many attracted by the relative affordability of multi-residential dwellings compared to house and land packages, as well as the firm prospects of future capital growth.

And Sydney’s latest coronavirus-related lockdown is having little impact on buyer enthusiasm, with restrictions on the number of people allowed in display suites at any one time becoming a scheduling challenge for developers and sales agents.

In response to soaring levels of buyer enquiry, ALAND has brought forward the sixth stage of its Schofield Gardens apartments precinct in Schofields by nine months, following the launch of the development’s fifth stage in March.

ALAND sales director Mark Bernberg described the strength of the current market as “incredible”.

“This past weekend, we had 72 appointment slots across all of our display suites on Saturday and Sunday, whereas ordinarily that would be 150 to 200 appointment slots, but we still saw significant conversions,” Mr Bernberg told Australian Property Investor Magazine.

“The people that attended and said they really wanted to find a new home really were intent on buying, and we saw that in the conversion rates over the weekend, which were very strong.”

While Mr Bernberg said the majority of ALAND’s sales in recent months had been to first homebuyers, he said investor activity was steadily on the rise, and accounted for around 36 per cent of sales at Schofield Gardens.

“There has definitely been an uptick in investors over the last little while, there’s no doubt about that,” Mr Bernberg said.

“I think it’s down to better lending conditions, and the opportunity with vaccinations starting to be strolled out.

“Hopefully at some point borders will reopen, migrants will start coming back to the country and it will start to be an investor’s paradise.

“The only question is going to be how much stock is available at that point in time.”

Mr Bernberg said the other compelling proposition for investors was the solid prospects of capital growth in many Western Sydney suburbs. 

“We are very confident for the future, particularly when you look at the delta between house and land packages and apartments in some of the areas that we operate in,” Mr Bernberg said.

“Four weeks ago, 450 square metres of land in Schofields sold for $1.08 million. By the time you put a house on that, you’re up to $1.2 to $1.3 million. 

“Now if you think about our three bedroom apartments, they are priced at $740,000 to $750,000, and you’ve got three-bedroom houses at $1.3 million or $1.4 million. 

“The delta has never been greater so we do see an opportunity for capital appreciation in some of these growth areas in the coming years.

“These are the high growth areas of Western Sydney - these are not areas where we are predicting growth for one or two years, these are high-growth areas. 

“We think it's a good area and all the research that’s been done points it towards being a great area. 

“The whole North West - Rouse Hill, Marsden Park, Schofields, that whole area is really operating very well at the moment and operating very nicely.”

Those market fundamentals have attracted a growing range of developers to Sydney’s North West, with forecasts showing dwelling values are likely to rise by around 20 per cent by the end of next year.

In Rouse Hill, CDMA Australia is looking to capitalise on the region’s booming growth in infrastructure, with a $300 million new hospital, a new campus for Norwest University, the $291 million Tallawong Town Centre and a $250 million expansion of the Rouse Hill Town Centre all committed for the next few years.

CDMA sales and marketing manager Kevin Chen said that compelling infrastructure investment, as well as strong population growth forecasts, had attracted many investors to the company’s Rosella Place apartments precinct.

Mr Chen said Rosella Place would comprise 352 apartments across five buildings, which he described as a “brilliant investment opportunity”.

“We have already experienced an overwhelming number of investor purchases, and this is proof of the return of investors to the market and the faith that they have in Rouse Hill’s current and future growth, as well as CDMA as the developer,” Mr Chen said.

“Within the next few years, Rouse Hill will be a rapidly growing and developing centre in Sydney’s north west, with thousands more residents who will be supported by significant local infrastructure.”

Investors are also converging on Villawood, driving strong sales results for boutique developer ABA Group’s V1 Apartments near the suburb’s town centre.

ABA Group has sold 50 per cent of its offering at V1 in a short timeframe, with investors attracted by similar fundamentals to other boom locations in Sydney’s west.

Around $326 million has been committed to upgrade Villawood’s town centre, complementing substantial government investment in transport, connectivity and urban regeneration.

Also attracting investors to Villawood is the potential for strong rental returns and solid capital growth, according to St Trinity Property Group Will Wehbe, who is managing project sales and marketing for ABA Group.

“Villawood has a much tighter rental market than neighbouring regions, with a high proportion of renters and strong gross rental yield, but little stock on the market to satisfy the increasing rental demand,” Mr Wehbe said.  

“The suburb of Villawood is changing - the steadily rising number of registered businesses means the area is now being coined a growing employment hub. As a result of the growing number of residents with tertiary qualifications, impressive socio-economic growth is also occurring.   

"Overall the demographic of the area is shifting upwards as it attracts young professionals. 

“The suburb’s capital gain of 10.05 percent for the past year is higher than average compared to its 11.15 percent growth within a five year period.  

“Property investors have also seen a 2.86 percent gain in Villawood based on an increase in median home prices for the past three months. 

“In fact, a survey of average capital gains or median home price increase in suburbs across the country shows that this suburb obtained a 7.88 percent growth over a ten-year period.  

“Due to the strong demand and quality of the apartments, stage one is averaging a rental yield of 4.88 percent for its investors and is unmatched in Sydney.”