Sydney May 2018

The month in review: Sydney

By Herron Todd White
May 2018

The prestige market in Sydney is spread across a number of regions including riverfront locations in the south and inner west, to large estates in The Hills, to large modern inner city apartments, to harbour side and beachside areas of the east and north. Traditionally prestige properties were considered to be those with a value above $3 million, however in some areas this is now $5 million and above. The prestige market has experienced significant growth over the past five years, however has experienced some softening of prices over the past six to twelve months, with some areas holding up better than others. A recent CoreLogic article indicated a 5.7% fall in the prices of the 25% most expensive properties in Sydney over the past 12 months.

As outlined in last month’s edition, we consider the prestige market to be less dependent on affordability issues than other markets. Instead, the market is driven by global flows of wealth and a supply versus demand balance. In summary the factors that will help stimulate the Sydney prestige market include the Australian dollar, domestic and international share markets, business performance, business confidence, company profits, Chinese interest in trophy homes, buyer activity from expats and migration interest under the Significant and Premium Investor Visa Program.

Eastern Suburbs

The eastern suburbs prestige market has started 2018 fairly strongly, carrying over from what was considered a solidly performing 2017.

Good quality family homes in the $5 million to $10 million price range are the strongest sector of the prestige market. The harbourside suburbs of Bellevue Hill, Rose Bay, Woollahra, Double Bay, Dover Heights and Vaucluse and beachside suburbs such as Bronte, Tamarama and Clovelly have all seen steady numbers of prestige sales in the year to date.

Local high income families have been the typical buyers for these types of properties which is driving this sector. Vaucluse saw approximately 11 registered sales above $5 million in 2018 (as at 19 April) with two of these sales being above $10 million (source: PriceFinder, RP Data and Realestate.com.au.).

The higher price points of $15 million plus, often referred to as trophy homes, have seen limited transactions and some market softening with extended selling periods. Vendor expectations have had to become more realistic to meet the market.

This is fairly similar with the prestige unit market with somewhat mixed results and limited transactions occurring in the $5 million plus category.

Buyers are becoming more cautious particularly in regard to those considered to be secondary prestige properties (busy road positions, steep sloping sites, etc). There are also an increasing proportion of prestige properties being sold off market though local agents.

Overall there are some mixed results within the eastern suburbs prestige market and the rest of 2018 is expected to see a continued stable market with some of the price points and property types experiencing some softening.

Some examples of recent prestige sales in the area include 148 Old South Head Road, Vaucluse, which sold in March for $8.2 million after 30 days on the market and 178 Hopetoun Avenue, Vaucluse, which sold in April for $17 million after 253 days on the market with original expectations in August 2017 of $22 million.

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CBD and Fringe

The Sydney CBD prestige market consists of predominantly substantial home units within sought after developments that benefit from panoramic views on upper or penthouse levels, high quality finishes and design and being located within wellregarded positions. Properties of this calibre are generally considered to be within the $5 million to $10 million price range.

A top floor penthouse sold in November last year for $7.55 million in a development known as Lumiere. The unit was set over three levels with 292 square metres of living area, 3- to 4-bedrooms, 3-bathrooms and direct lift access to all three levels of the apartment down to the double basement car space.

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Moving up to the ultra-prestige market, which we consider to be over $10 million and is restricted to the very best properties. There are far fewer transactions at this level however there have been several recent sales of penthouse CBD apartments exceeding $20 million and are reserved to the trophy apartment market.

A property of note is the landmark penthouse which sits above the ANZ Tower on Castlereagh Street which was recently listed for sale as part of an international marketing campaign at an asking price of $66 million. This is ,hoped to beat the current apartment record of $60 million set in Barrangaroo for James Packer’s yet-to-be-built apartment.

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Sky Mansion sits on top of the development on level 43 and is the only apartment within the ANZ commercial building. The residence was completed in 2015 and was named the world’s finest residence at the International Design and Architecture Awards last year. According to a recent article on domain. com.au, the property consists of a total area of 2,000 square metres plus a 400 square metre private car park via an express lift. The property also features multiple grand living areas, gym, cigar room, rooftop swimming pool and several terraces.

This type of commanding property is likely to continue to perform well in the near future given the lack of supply and increased demand that the Sydney prestige market has been attracting from the world’s elite for its stable economy, proximity to Asia and world-class health care to name a few.

Within Sydney’s inner west region we consider prestige property to be above $5 million. For this price tag you could expect a premium quality residence on a large land holding within Strathfield’s Golden Mile which is located within prestigious school catchment zones including Trinity Grammar, Meriden School and Santa Sabina College. Alternatively, $5 million to $10 million could get you a grand residence closer to the city, within some of the inner west’s sought after harbourside suburbs such as Drummoyne, Birchgrove or Balmain.

A recent prestige sale in the inner west was a fully restored, heritage listed 1900s-built residence which is privately secluded on a deep waterfront land holding of approximately 765 square metres with a north-east aspect and views toward the Sydney Harbour Bridge. The property also includes multiple living areas, period features, a refurbished boatshed and mooring for a 30 foot vessel.

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Lower North Shore

The Lower North Shore has experienced extremely strong market conditions over the past 4 years, and although the Sydney market has generally cooled in recent months, the prestige sector has remained more buoyant. The buyer profile on the lower North Shore is varied, with both local and international buyers active in this market. Property types at the prestige level in are very diverse and incorporate waterfronts, non-waterfronts with large parcels of land, period style estate homes, ultra-modern architecturally designed homes and properties with high calibre views.

The affluent harbourside suburb of Mosman, on Sydney’s Lower North Shore, experienced a nearrecord breaking sale in March 2017, with the sale of 10 Bay Street for $22.45 million (as per RP Data records), a waterfront estate with Middle Harbour water views. This was a much publicised sale and was proof of how strong the prestige market was at the start of 2017. As talk of a market cool down has become prominent in the media early this year, the Mosman prestige market showed its resilience with the reported recent, record setting sale, of 1-3 Burran Avenue for around $23 million (exact price yet to be confirmed). The property sold within three weeks of going to market, rare for properties at this price level, with the details of the purchaser being kept confidential. The property features a contemporary home on a comparatively large non-waterfront parcel of land, with quality Middle Harbour views towards North Head.

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The prestige market on the Lower North Shore is predicted to be steady in the short-term, and is unlikely to continue the extremely strong growth experienced over the past 4 to 5 years. In saying that, if a certain property ticks all of the boxes for a potential buyer in this prestige market, there seems to be no lack of confidence and no shortage of money out there. Assuming there are no major economic issues, and with Sydney’s increasingly international real estate market presence, the Lower North Shore prestige market is expected to in high demand.

Upper North Shore and Hills District

When most people think Prestige property their attention is always drawn to the eastern suburbs or lower north shore of Sydney. The North West of Sydney and upper North Shore are home to many executives with significant capital to invest in prestige real estate. There has been a number of strong results over the last 12 months showing that whilst the wider market has begun to cool, there are still cashed up buyers out there hunting for prime real estate. Prestige properties are the best houses on the best streets and record the top prices for the areas. Some strong results for the North West include an $8.8 million sale on Old Northern Road Dural, a record for the area. This property is a substantial residence featuring 8 bedrooms and 10 bathrooms, large in-ground pool, tennis court and a fully landscaped 2 hectares with elevated district views towards the Blue Mountains. It was marketed for almost 12 months, not unusual for homes of this calibre. It highlights the difficulties in selling property at this price point, because if you have circa $9 million to spend in this area you are able to purchase an older home, knock down and rebuild your home to your preferred design and specifications.

There are always exceptions to the rule, an example includes a property in Wahroonga selling for $7,800,000 in October 2017 after only 11 days on the market. This highlights that if a property ticks all of the boxes for the area then they have the ability to get snapped up quite quickly. The property provided a renovated character dwelling with pool and tennis court on a level, half acre of landscaped grounds, within a short walk to the railway station and local shops. This displays that there motivated purchasers in the market ready to move quickly for the right property.

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The Prestige market can be a little fickle at times due to the limited stock available of high calibre property and the length of time taken finding the right buyer at the right time. We find that the biggest home in the suburb is not always the best, what appeals to the north shore market may not appeal to the acreage market. Transactions at this level of the market are often dependant on personal preferences, what appeals to one buyer at this end of the market, may not appeal to the next.

St George and Sutherland Shire

Traditionally within the St George area the higher prices gravitate towards the waterside suburbs such as Blakehurst, Sans Souci, Kyle Bay, Connells Point, Oatley and the relatively small Kogarah Bay. In recent times however the prestige market, which is usually reserved for properties in excess of $3 million, has seen countless examples of new homes, many without water views, breaking into this bracket.

The buyer profile will vary between the young family upsizer and the older generations looking for lower maintenance or multi-generation living arrangements. Providing a balance of suburban feel (good block sizes and low-medium density development) and proximity to the CBD the area has and will continue to attract a variety of buyers to the area. A recent prestige sale in the St George area was 78 Carlton Crescent, Kogarah Bay, a waterfront residence on almost 1,000 sqm and offering expansive Kogarah Bay views, which sold in March for $5 million. Another waterfront sale at 210 Terry Street, Connells Point was a newly built property on more than 1,100 sqm, which sold for an undisclosed price of over $5.5 million in December. The property was constructed at the water’s edge with high level of finishes, 4 bedrooms, 7 bathrooms, marble flooring, CBUS, 4 car garage, heated in-ground pool, boathouse, slipway, jetty and pontoon.

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In the Sutherland Shire the prestige market is typically restricted to waterfront properties which sit on either Port Hacking or the Georges River, in suburbs such as Yowie Bay, Caringbah South, Burraneer, Cronulla, Kangaroo Point and Sylvania Waters. Prestige properties are generally considered to be those above $3 million with those above $5 million considered to be ultra prestige for the area. The ultra prestige market generally consists of large waterfront properties with expansive water views and high levels of finishes.

The prestige unit market in Cronulla has become popular amongst downsizers with a number of boutique apartment developments being constructed over the past decade. These units, which typically sell between $3 and $5 million are large in size, with high levels of finishes, and typically benefiting from substantial water or beach views.

The prestige market in the south has weakened over recent months although some properties are still achieving results above expectations. It is expected that this market will continue to stablilise over the short term.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.