Sydney’s elite breathing easy during COVID’s prestige property boom

While millions of Australians are suffering the ignominy of sliding into negative equity or selling property at a loss, the champagne corks are popping as Sydney’s elite enjoy their financial freedom.

Record prices, glitzy new developments and surging demand are driving eastern Sydney’s prestige property market upwards, with apparent immunity from the impacts of the coronavirus belittling the rest of the nation’s economy. 

Real Estate Institute of New South Wales chief executive Tim McKibbin said prices were defying gravity despite rental vacancies soaring above 5 per cent for the relatively expensive properties located within five kilometres of the CBD.

“Inner city tenancy vacancy rates are taking off as people abandon the office but for those buying $10 million properties, they’re not worrying about the rental prospects,” Mr McKibbin said.

The real estate market in Sydney’s inner-Eastern suburbs kicked off 2020 with one of its strongest ever starts, according to Jason Boon, Co-Director of Richardson & Wrench Elizabeth Bay/Potts Point. 

Although conditions changed rapidly with the onset of the pandemic, Mr Boon says low supply and high demand are driving prices up again. 

“We’re fortunate to be operating in a tightly-held established market where there is still solid demand from downsizers, investors and expats, and in fact, with the pandemic forcing Australian expats to return home, they are currently one of our strongest vendor demographics, accounting for 20 per cent of current sales,” Mr Boon said.

Recent sales include 5/40a-42 Macleay Street, Potts Point, which sold this month for $6.66 million, beating its reserve by $200,000, and 1/22-24 Macleay Street, Elizabeth Bay, which sold for $3.85 million – $300,000 above its reserve.

In June, the sale of 112 Surrey Street, Darlinghurst, achieved $4.6 million – surpassing its reserve by $620,000.

Any well priced stock in the $3 million to $15 million range was selling “in a heartbeat”, according to Danny Doff, principal of Laing+Simmons Double Bay.

And sales in the stratospheric levels were breathing easy in a COVID economy too. Eye-watering recent sales include a $95m harbourfront estate on Point Piper’s Wolseley Road to a Chinese buyer and disgraced insurance magnate Rodney Adler’s Vaucluse home changing hands for $16m.

Pott luck

Mr Doff said demand for houses with land and some semi-detached properties was strong, while Sydney Harbour views were taking discriminating buyers months or even years to secure.

Local buyers were active in the low and mid-millions, while returning expats and Chinese buyers were driving the elite end of the prestige market.

“The market is being propped up by a lot of cashed-up billionaires and Chinese, some based here, seeking trophy homes,” Mr Doff said.

“Vaucluse is the standout area where prices are taking off,” he said, citing the sale of 42 Vaucluse Road, which sold in 2013 for $11.3 million and recently went for a cool $24.6 million.

Mr Boon said that, despite the impact of coronavirus, Sydney’s inner-Eastern suburbs, especially Potts Point, will remain a sound investment – no matter what happens to the rest of the economy. 

“The introduction of Sydney’s controversial lock-out laws fast-tracked the diversification of Potts Point, with an increasing number of downsizers and investors realising the advantages of residing in an area close to the CBD and Sydney Harbour.

“Today, it is really the ‘Soho’ of Sydney with its high-end luxury apartments, famous lifestyle and dining options,” he said.

The hyperactivity at the top end of the market is also supporting the development of new luxury towers in Circular Quay and Barangaroo precinct.

The Opera Residences, where the penthouse sold for $27m to businessman and philanthropist Robert Salteri and wife Kelly, will be completed first, and resales to local buyers are easily surpassing original purchase prices, The Australian reported. 

AMP Capital’s Loftus Lane will see 78 rundown public housing units replaced with a premium boutique development of similar scale.

While little seems to have changed for the wealthy and mega-rich, the way they go about buying their mansions has undergone some changes.

“We’re seeing a lot more properties sold through private treaty, with the current climate forcing us to work more closely with buyers concerned about social distancing,” Mr Boon said.

“These account for up to 40 per cent of our current sales – an increase of 10 per cent from 2019.”

Mr Doff told Australian Property Investor Magazine that buyers agents were becoming more prevalent during the pandemic, while 3D walkthroughs and online videos were also becoming a marketing norm.