The Colliers International Residential Development Sites team has recently published The Developer’s Advocate, a report that shares market insights, current site and project marketing listings and the success the team have seen across the Lower North Shore region.
As the report indicates, supply of new projects is quickly slowing across most of Sydney’s regions, with DAs showing the same trend as was evident pre-Covid. As a result, there’s general agreement that there will be a dramatic fall in in 2021-2022 and an even stronger under-supply trend beyond 2022, when supply is expected to collapse.
Demand is currently being driven not only by the potential decline in the supply of new apartments, but also more generally as many established developers driven by recently completed projects, are now looking to secure a new pipeline of future stock.
As markets hopefully gain confidence, and head back to more normal conditions in the final quarter of 2020, with stabilised conditions, experienced developers are likely to drive demand for new sites.
Colliers believe this demand will be driven by a combination of very low supply, recovering buyer sentiment and low interest rates. Although for some, securing construction finance may to a degree remain a hurdle.
Varied Site Opportunities
With that in mind, Colliers continues to see wide-ranging demand for sites of flexible development options. These range between sites that are ready to go with a DA in place, to raw sites and also large gateway sites, the variety of sites is a key aspect of the market’s appeal.
While in the full context Sydney’s North-Shore is set to deliver a wide range of development opportunities. Some are associated with the new Sydney Metro, as it continues to re-shape a number of suburbs including Crows Nest/St Leonards, Chatswood and Macquarie Park.
A factor that’s also helping to drive demand in the closely related North-West corridor between Rouse Hill and Castle Hill.
Future Supply
The impacts of COVID will clearly be felt in the timing of new projects from their current holding pattern. The State Government is well aware of this reality and is keen to encourage development. Achieving this will need smoother and simpler the planning process including DAs and freeing up projects that are stuck in the Land & Environment Courts. While Stamp Duty reforms appear to be gaining momentum as a possible lever to stimulate growth and buyer demand.
While further measures to boost economic activity will continue to focus on infrastructure spend and the delivery of completed projects, alongside further asset sales by the Stage Government.
Colliers has reported that conditions in the rental market are liable to change the demand profile for developments sites as demand continues to shift to the owner-occupier across varied demographics, but always underlined by quality.
While levels of unemployment and underemployment will have a big impact on market sentiment, and hence the demand for new development sites, low interest rates and various industry-focused incentives will act to help keep a floor under demand.
Supply levels have been falling since reaching their peak in 2017/2018 and by 2022 will be at a decade low. This will create wide-ranging opportunities that could benefit from a flight to quality. Continued demand from downsizers, a recovery in local investor demand from current low levels, and the very real prospect of renewed ‘safe-haven’ off-shore demand will give further support.
Lower North Shore Success
Colliers Internationals Residential Development Sites Team have continued to see successful results across Sydney’s Lower North Shore; In the past 12 months alone, they have sold over $150 million of boutique development sites in the area.
The current COVID-19 economic environment is likely to impact residential real estate values in the short to medium term. Nevertheless, their research proves that, for the North Shore of Sydney the future development environment will remain strong, largely due to short levels of future supply mixed with strong demand for apartment style living traditionally seen on the North Shore of Sydney.
