A growing contingent of Sydney investors and developers are turning to regional NSW markets in the pursuit of higher yields and prospective growth opportunities.
Several recent sales in Young and strong interest in current investment opportunities in Dubbo and Tamworth have highlighted the current push to the bush according to a new market review from CBRE.
In one of the larger recent deals, a Sydney-based developer outlaid $2 million for a 21,632aqm residential development site at 21 Campbell Street in the town’s commercial centre. The former Mercy Care Hospital, which was decommissioned in 2004, is governed by a flexible zoning and has the potential to be subdivided into smaller house and land packages, retirement living or a villa style development.
CBRE’s Xavier Rahme, Stephen Grant and Nick Heaton negotiated the deal after a keenly contested sale campaign, which attracted 125 enquiries and led to five contracts being issued.
In a second recent transaction, a Sydney investor snapped up the Young home of Mitre 10 – Australia’s largest independent home improvements and hardware wholesaler – for $1.85 million.
The 256 Boorowa Street site was sold under the hammer - also through CBRE’s Xavier Rahme, Stephen Grant and Nick Heaton - after attracting more than 100 enquiries.
The sale price translates to a yield of 8.86% based on a new 3-year lease with a three-year option.
“Strong investment market conditions in Sydney have had a ripple effect, with price growth in some major regional NSW towns now outpacing that of the harbour city,” Mr Rahme said.
This level of buyer interest is also expected for a historic Tamworth church built in 1866, formerly known as the Old Bell Tower. The property will come to market with CBRE in the next fortnight. The property currently houses a tea & coffee house and antique shop.
Regionally based CBRE agent, Tom Sheridan, has seen a similar trend occurring in the Central West regional city of Dubbo.
“Regional assets in major cities such as Dubbo, offering leases to secure national tenants, are attracting the attention of traditional Sydney centric buyers due to the attractive yields on offer,” Mr Sheridan said.
“Yield compression across the major capital cities has seen led a growing number of investors to redeploy capital into rural markets that are not at the top of the cycle and offer significant future growth.”
For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
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 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 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.