Downsizing baby boomers are creating a boom in one capital city apartment market, with developers fighting to keep up with the thriving demand.
CBRE’s director of capital markets, Nicholas Heaton, said Sydney’s north shore apartment market has been experiencing its strongest levels of growth in recent years.
Development sites positioned between Northbridge to Manly and across to Cremorne Point, commonly referred to as the ‘downsizer triangle’, have been consistently trading between $550,000 and $1,700,000 per unit site due to the unprecedented demand from baby boomers, according to CBRE.
“In the past 12 months, there has been numerous boutique North Shore development sites sold, offering 50 or less apartments, with over 85 per cent of them transacting off-market,” Mr Heaton said.
Three sites along Military Road in Mosman at 363, 705 and 710 reportedly sold recently, as well as two sites in Neutral Bay at 19 Young Street and 9-11 Rangers Road, 36-42 Parraween Street in Cremorne, and 5 Pavilion Street in Queenscliff.
According to CBRE, the turnover has totalled circa $60 million, yielding 75 units, in a market that is starved of new apartments to meet the needs of the downsizer.
“Motivated to downsize from their palatial residences, the baby boomer group still seeks to remain within the region they have called home for the past 30 years,” Mr Heaton said.
“They are trading out of their grand [$5 million to $10 million] homes in exchange for an oversized three-bedroom apartment.
“Market data is indicating they have a preference for avoiding large-scale developments, instead focusing on projects comprising 50 units or less.”
Toby Silk from CBRE’s north shore team said that with a limited supply of land available in the esteemed Sydney market, developers recognise the opportunity available to meet this thriving demand.
“Consequently, development sites are being snapped up before they can be brought to market,” Mr Silk said.