Investors are currently targeting Sydney’s south for strategic commercial investment opportunities, underpinned by the area’s 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subsequent conversions, are currently focused on the South Sydney area – with over 60,000sqm of stock expected to be withdrawn in the area throughout 2016.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 The increasing numbers of withdrawals, with almost 260,000sqm expected to be withdrawn by 2020, is placing heightened pressure on supply and subsequently increasing demand,” said Mr Grant.
Future development potential has emerged as another key motivator for investors when acquiring sites in South Sydney, Mr Grant said, adding that buyers were 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,” Mr Grant 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 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 added.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.