Developer surge on Sydney’s hot-selling North Shore
Developers are descending on Sydney’s North Shore, with strong underlying demand from upgraders and downsizers and a shortage of premium dwellings providing the foundations for more than $4 billion worth of new townhouse and apartment projects.
With the North Shore considered as one of Sydney’s most desirable corridors, developers have been competing strongly for suitable sites, with more than $1 billion in development site sales settled in the last 12 months.
Suburbs in focus include North Sydney and its surrounding near-harbour suburbs, as well as St Leonards, Crows Nest, Chatswood and Macquarie Park.
Savills Australia director of residential site sales Stuart Cox said developer interest on the North Shore was building, with a combination of scarce opportunities and strong buyer demand an enticing prospect.
“If you can find anything in the market with a DA approval that can provide owner-occupier products, there is a huge amount of demand,” Mr Cox told Australian Property Investor Magazine.
“We speak to developers day in and day out, they are all looking to buy sites, but they want to buy all of the sites and delay settlement, so they have more than ample time to go and get their DA and have an extended period to get presales.
“In the last 12 to 18 months, there has been a huge increase in demand pretty much anywhere in that lower North Shore, which is typically from North Sydney, all the way up to Roseville and Chatswood, purely because of the proximity to the North Sydney CBD and the Sydney CBD.
“They have the train and access to both of these CBDs.”
Mr Cox said Savills had also noticed an increase in vendors seeking to take advantage of current market conditions to sell development sites, with uncertainty continuing to surround market values going forward because of the coronavirus crisis.
“We do a lots of amalgamated sales and collective sales, and there are a lot of owners now that want to capitalise on the market now and sell and delay a settlement and try and get a good price, because of the fear that moving forward down the track that the market could come off 15 to 20 per cent,” Mr Cox said.
“That uncertainty is applicable to certain areas, but in the Lower North Shore, the Northern Beaches and the CBD, prices won’t drop anywhere near that.”
Developer interest in the North Shore is matched by buyer appetite, with demand from owner-occupiers, upgraders and downsizers resulting in quick selling times for high-quality dwellings.
Over the last three months, North Sydney and neighbouring Hornsby have outshone the Greater Sydney auction market, with a clearance rate of 68.1 per cent eclipsing the Sydney benchmark of 67.6 per cent.
Some weekend clearance rates have surged in excess of 75 per cent, a strong indication of the hot demand when quality homes come to market.
However, stock remains tightly held in the area, with listings over the last three months representing just 0.67 per cent of all homes, compared with 1.05 per cent for greater Sydney.
Boutique developer Mayrin Group is one of a cohort of developers bringing new product to market on the North Shore, with its recently-launched The Archwood in Roseville proving a hit with buyers.
Mayrin Group had previously had success in neighbouring Lindfield, with settlements of a 62-apartment project expected in November.
The $110 million project will be delivered in two stages, with marketing for the 20-townhouse first stage launched mid-pandemic.
Mayrin Group director William Wu said COVID-19 initially posed significant challenges for selling the townhouses, but once restrictions were lifted, interest was quickly converted to contracted sales.
“It took us two weeks to sell 14 contracts,” Mr Wu said.
“Our townhouses range from $2.5 million all the way to more than $3 million, and out of the 14 that sold, all of them were at or above the $3 million price level.
“Our buyers were owner-occupiers, and they really wanted to buy the best townhouses within this development.”
Mr Wu said the decision to develop 42 townhouses on the Roseville site, which is located on a 6,778 square metre amalgamated site bordered by Archer Road and Boundary Street, was made after careful market analysis.
“When we looked at the site, we found townhouses would be a better planning outcome, and also a better architectural outcome,” Mr Wu said.
“That’s why we hired DKO Architecture. The main designer there is David Randerson and he is really experienced in designing townhouses.
“We brought him on board and he really did some amazing design on the facades and also the interior.
“In Roseville, we are the only townhouse development at this stage, and I don’t see any others in future DAs in Roseville.
“In Lindfield I know there is another one and also in Gordon there are a few townhouses that have been delivered to customers.
“When we are talking about future pipelines, I am the only one in Roseville.”
Mr Wu said all of the townhouses sold to date at The Archwood went to owner-occupiers, with the company’s marketing campaign squarely focused on the downsizer market.
“With the pandemic, the message I’ve received from the market is that buyers are preferring to choose medium-density houses to live in, because they have concerns for public health and for high-rise towers,” he said.
“If you are an owner-occupier, of course people would prefer low to medium-density housing.
“But for investment, it’s a numbers game, you just do your maths on potential rental and capital appreciation.
“Investors are generally more interested in Lindfield and our other project at Rouse Hill, in the north west.”
Savills’ Mr Cox said the sales results achieved at The Archwood was nothing short of remarkable, particularly with the uncertainty of COVID-19 hanging over the wider economy.
“It’s unseen before, having such strong demand for that kind of value product,” Mr Cox said.
“Anything north of $3 million, those buyers generally want to touch and feel the end product.
“But because William has done so much work up front in terms of getting the right architect on board, the right level of finishes and the right level of interior decorators, and having already cleared the site.
“He’s already demolished all of the improvements on the site so it’s a vacant site, which shows commitment to the development and a willingness to move forward.
Mayrin Group, however, is not alone in seeking to deliver new projects on the North Shore, with some major industry heavyweights also advancing significant plans in the area.
One of the North Shore’s most highly-anticipated new developments is Mirvac Group’s plan for a 460-dwelling project at Willoughby, on the old Channel 9 site it acquired for $249 million earlier this year.
Mirvac head of residential Stuart Penklis said the North Shore had always been an integral part of the ASX-listed developer’s strategy, with a wide range of projects delivered over the past few decades.
“It’s always been part of our backyard, that market, and our brand is very well received in the area,” Mr Penklis said.
“We just finished St Leonard’s Square up there, which was 530 dwellings and that went extremely well.
“Chatswood has always been a big market for us, the Upper North Shore has always been a big market, so any time there is an opportunity of scale on the North Shore, we are certainly always quite keen.
“When you look at the Lower North Shore, there is a shortage of supply, even though we have gone into a subdued environment. Just looking at upgraders and downsizers, quality, well-designed projects are alway well received.”
Mirvac’s plan for Willoughby is to deliver up to 460 apartments across nine mid-rise buildings, ranging from eight to 10 storeys.
The project is expected to be launched to market next year, while a 230m tall television transmission tower, which has been looming over the area as an eyesore for decades, will be demolished as part of the development.
“When the NSW government releases the rezoning of the Crow’s Nest-St Leonards region, there will be more supply in that corridor, but in terms of low-rise, large sites, the Willoughby Channel 9 site, it’s 3.2 hectares in Willoughby, you can’t see another site of that scale coming to the market any time soon,” Mr Penklis said.
“To be able to do something like that with low to mid-rise buildings and 6,000 square metres of new public open space is certainly something quite unique and that’s why we really pursued the opportunity.
“We hear it time and time again from our repeat purchasers, quality product, Lower North Shore, from a tier one developer, there is not a lot of it and that is why it’s so sought after.
“People downsizing out of a more traditional family home in the North Shore would gravitate towards a mid-rise apartment building, anywhere between four to 10 storeys.
“Whereas the more high density residential, around 30 storeys, it is probably less of an attraction for downsizers.”
The Willoughby site is coincidentally located adjacent to a Mirvac-developed project developed in the late 1970s, which was considered ahead of its time in terms of its focus on landscaping and the design of its public open space.
That sort of amenity is also integral to Mirvac’s new Willoughby project, which will provide 6,000sqm of public open space to provide recreational opportunities not just for residents, but for the surrounding community.
“We spoke to a number of those customers, and it was interesting that that project was very heavily focused on its landscaping and the design of its public open spaces,” Mr Penklis said.
“When you look at resales of that project, even today it is still referred to as a Mirvac development and built by Mirvac, it’s a real attribute that’s constantly repeated in all of the marketing of those apartments.
“We have been fortunate that we have such a strong track record and reputation and loyalty in that market.
“People are very excited that we are entering the market again, which has just allowed us to make sure that as we design this product, we really have the customer in mind.”
Also active on the North Shore is Avenor, which is planning to build a 29-storey, 280-apartment residential tower just east of the North Sydney CBD on Walker Street, around 200m away from the new Victoria Cross Metro Station.
Following an extensive community consultation campaign and engagement with the North Sydney council, Avenor has submitted plans to be assessed by the Sydney North Planning Panel in coming months.
Avenor managing director James Paver told Australian Property Investor Magazine that there was little to no supply of residential projects in the North Sydney CBD, which was clearly an attractor for the developer.
“It’s a pretty unique product because there is not much to buy around there,” Mr Paver said,
“It’s pretty early days, but people are starting to submit their interest.
“There are not many tower sites in Sydney that have both proper views of the harbour and the city as well as a good northern aspect.
“You’ve got Kirribilli and Mosman where you can see the harbour but you are on the south side of a hill and you don’t get the sun.
“What we are going for here is to have that northern aspect but still have views of the harbour.”
In Macquarie Park, Frasers Property Australia was recently issued approval for its $2.2 billion masterplan to deliver around 3,300 homes and 6,000sqm of open space at its Ivanhoe Estate.
Frasers’ plan at Macquarie Park received a boost when it was included in the NSW government’s Planning System Acceleration Program, an initiative designed to fast-track projects to help the state recover quickly from the COVID-19 pandemic.
Ivanhoe Estate, which Frasers is delivering in partnership with community housing provider Mission Australia Housing, is a comprehensive urban renewal project that will include a new school, an aged care facility, childcare and community centres, a new supermarket, cafes and specialty retail alongside a wide range of recreational facilities.
Frasers Property Australia chief executive Rod Fehring said the project was not only important because of its scale and economic impact, but also its community housing aspect.
“By taking a long term and holistic view, complemented by a design-led environmental and social sustainability approach, we believe this new community represents a better answer to Sydney’s housing needs,” Mr Fehring said.
“As a mixed tenure community, we’re confident it will succeed where others have not, paving the way for new solutions to housing issues in Australia and around the world.”
A suite of new apartment developments are also being planned on the North Shore, with Chinese-owned Aqualand having more than 1,000 apartments in its current pipeline.
At Chatswood, Aqualand is partnering with Develotek for a 600-apartment development, while it is also moving forward on a 441-apartment project on Walker Street in North Sydney.
Local boutique developer Podia also recently acquired a North Sydney development site at 45 McLaren Street, with architecture group Bates Smart and planning specialists Urbis working with the company to create a mixed use project in the heart of the North Sydney CBD.