THEY AREN’T even built yet, but 391 inner Sydney apartments flew off the shelves at the weekend despite wider industry talk of a development glut.
Developer Lendlease released its final stage of Darling Square on Saturday, but within four hours all units were gone with dozens of keen buyers left out, unable to secure an apartment.
Purchasers parted ways with up to $3.5 million for a three-bedroom penthouse and one studio apartment was sold off for $630,000.
The sell out comes at a time when the wider property industry is debating whether our major cities are currently going through an apartment development glut.
CoreLogic research analysts Tim Lawless and Cameron Kusher released a New Settlement Risk Report earlier this month in which the pair studied the number of units due to settle over the next six, 12, 18 and 24 months.
The report identified that across the combined capital cities, there were 92,102 new units set for completion over the next 12 months with that figure expected to rise to 231,129 during the next two years.
Mr Kusher said that the volume of units still due to settle, particularly in Sydney, Melbourne and Brisbane, compared with the average number of annual unit sales over the past five years showed a “a big disconnect”.
But the clear demand for Sydney’s off the plan apartments could be due to a unique demand dynamic according to WBP Property Group chairman, Greville Pabst.
“Surely a proportion of that Lendlease development would be targeted at owner occupiers, instead of investors, and that’s probably the main reason why it performed quite well,” Mr Pabst said.
Mr Pabst added that Melbourne’s off the plan apartment sales were worse off because of recent changes to stamp duty fees in Victoria, as well as a greater oversupply.
“In recent months, the State Government in Victoria announced that they were making significant changes to stamp duty for foreign buyers. What they’ve done is they’ve added an additional seven per stamp duty for foreign buyers,” he said.
“Now with additional seven per cent on top of five per cent that makes the fee 12 per cent. Of course Sydney and Brisbane don’t have that additional stamp rate for buyers.”
Some of my investor clients I’ve had in Malaysia and Singapore are now looking at Melbourne and saying they’ll shut the door on it,” he said.
“But Sydney just isn’t as badly affected.”
Lendlease confirmed that demand for the Darling Square project came from “local” home buyers.
“Our estimate at this stage is that owner occupiers account for approximately two thirds of purchases across the first two releases. It’s too early to say what would be the case for this final release,” he said.
The sought after apartment development will sit on the site of the old Entertainment Centre, neighbouring Sydney’s busy China Town and Darling Harbour precincts, where a whopping $3.4 billion is being pumped into a regeneration project.
Almost a year to the day, the second release of the same development sold out more than 580 apartments in five hours. That 2015 sell out secured two $10 million-plus penthouses and totalled about $600 million worth of sales.
When completed the Darling Square development will house 1500 apartments with residents all moved in by 2019.
Lendlease estimates that the development will be home to around 4200 residents and see thousands of workers and tourists visit the area every day.
Jonathan Emery, managing director or urban regeneration for Lendlease said the company was “thrilled” with the rapid buyer response.
“People clearly recognise the value of owning and living in such a fantastic location near
the CBD. They are also buying into the new Australian dream of inner city living where everything is on your doorstep. At Darling Square we’re providing great public spaces and hand selecting the best of artisan bakers, baristas, restaurants and homeware designers, to create a welcoming new community for residents to enjoy,” he said.
“People want the convenience of inner city living to reduce their commute to work, but they also want ease of access to their everyday basic needs. All the shops are within walking distance which promotes a healthy lifestyle and encourages people to mingle with other residents in their new neighbourhood,” he said.