Investors are currently flocking to one area of Sydney for strategic investment opportunities, underpinned by its strong development and growth potential.
Suburbs including Botany, Mascot, Waterloo, Zetland and Alexandria are continuing to witness high levels of buyer demand, with CBRE recently negotiating a series of investment transactions over the past 12 months.
Stephen Grant of CBRE's South Sydney Capital Markets team said South Sydney investment assets are currently very coveted, particularly given the high number of recent residential conversions which have tightened the supply pipeline.
Demonstrating the trend, CBRE Research has recently identified Sydney industrial withdrawals, and subsequent conversions, and is currently focused on the South Sydney area — with over 60,000 square metres of stock expected to be withdrawn in the area throughout 2016.
“Warehouses are a good candidate for residential conversion as they typically occupy a sufficient amount of space and are relatively simple to demolish. The increasing numbers of withdrawals, with almost 260,000 square metres expected to be withdrawn by 2020, is placing heightened pressure on supply and subsequently increasing demand,” Mr Grant said.
According to Mr Grant, future development potential has emerged as another key motivator for investors when acquiring sites in South Sydney, and buyers are willing to pay premium prices to secure strategically located sites with long-term upside.
“Aside from future development potential, commercial assets offering long-term leases to desirable tenants are incredibly coveted — with investors needing to be competitive to secure these sites,” he said.
The recent growth of the South Sydney area, with projects including the Green Square Town Centre, further driving investor demand and underpinning a series of competitive sales have been recently witnessed in the area.
“Despite limited supply and tightening lending conditions, investors continue to have confidence in the long-term potential of South Sydney — which is making the current environment the ideal time for vendors to bring investment assets to the market to benefit from high returns,” Mr Grant said.