SYDNEY PRESTIGE APARTMENTS

Towers of strengthTThe luxury CBD apartment market is on the rise, with affluent downsizers spending up big on views to sigh for Sydney prestige JONATHAN CHANCELLOR This year has possibly been the busiest year ever for the prestige apartment market in the Sydney CBD, with numerous new luxury projects scheduled for settlement. Residents have started to move into Crown’s harbourfront One Barangaroo, and in the middle of the city occupancy is well under way at Sydney’s tallest apartment building, Greenland Tower, on Bathurst Street. Settlement is imminent for off-the-plan buyers in Loftus Lane, developed by AMP Capital, and Opera Residences on Circular Quay, developed by Landream and Macrolink. And after a bad water leak, the 104 units in the King & Phillip building will be settled mid-year. Castle Residences and The Harrington Collection will see settlements later this year too. Lend Lease’s $140 million One Sydney Harbour sale doesn’t settle until 2023. Settlements across the new batch of these luxury apartments will see a price reveal ranging up to the $60 million mark. Several price-per-square-metre records were set. And CBRE’s Ben Stewart, who handled the off-the-plan sales sell-out for Loftus Lane and Opera Residences, says there has been good uplift in both developments since they were sold. A Loftus Lane apartment sold for $6.5 million in 2017 has onsold at $7.3 million, while a resale in the Opera Residences achieved a price per square metre of $87,000 plus. In 2016 the Opera apartments averaged $60,000 per square metre, which set a record when the project sold out in just two hours – 95 per cent were snapped up by local buyers. At the time, the buyers’ agent Stuart Jones suggested the pricing was akin to New York’s Manhattan and London’s Knightsbridge. Ben Stewart notes that the current market continues to see a strong appetite for high-quality developments in prime positions, “and in particular in the $10 millionplus market, with owner-occupiers having experienced such an uplift with their homes in the past 10 to 15 years”. Stewart says there is minimal supply in the CBD, as he prepares to launch the apartments in the redevelopment of Sirius in The Rocks. “There was a lot of uncertainty last year during the global pandemic. However, basically from September onwards, confidence started to be restored and buyers started to show activity,” he says.

This month also sees the launch of the sales marketing for 111 Castlereagh through Colliers Residential. The apartments are due to be completed by mid2023. The luxury mixed-use development by Cbus will see 101 apartments designed by fjmt studio in a re-visioning of one of Sydney’s great 1930s department stores. The aim is a luxury retail precinct, plus creative workspaces, and beautiful contemporary residences above the heritage-listed David Jones store, completed at the corner of Market and Castlereagh Streets in 1938, an era when CBD high-rise residential was very much at a premium.

Longtime Christie’s International agent Ken Jacobs appraises the Sydney CBD as the only location that can offer such an impressive choice for Sydney’s most affluent downsizers. “An extraordinary situation has arisen where buyers, mainly downsizers with budgets well in excess of $15 million, cannot find suitable new luxury apartment options in the east and north, so are funnelled into the CBD,” Jacobs says. “These buyers are coming from overseas as well as family homes in prime eastern and northern suburbs.”

Jacobs, who has the stand-alone $66 million ANZ Tower penthouse listing in conjunction with Bill Malouf, says the city still offers developers the option of buying and demolishing single-owner commercial buildings to build new apartments, whereas harbourside suburbs are much more challenging due to the lack of suitable locations.

“The two issues in redeveloping such sites are the requirement to negotiate with multiple owners to agree to sell, and the combined value of the existing apartments is usually considerably higher than the underlying land value, which creates an unviable option.”

The penthouse offering was designed for the property developer John Boyd and his wife Marly. The rare penthouse, atop the commercial tower designed by Richard Francis-Jones, spans 2400sq m, with interiors by Blainey North. It has four bedrooms, a wine cellar and a marble kitchen, and a private rooftop level features a cabana lounge and pool. It has point blank views of Sydney Tower.

The current population of Sydney’s CBD is 20,050, plus 3300 in The Rocks and 9000 in Chinatown. The 30,000-plus total is small compared with the 4.9 million

Clockwise from main picture: One Sydney Harbour; One Barangaroo Crown Residences, and interior; Sirius, The Rocks

metropolitan population. But the CBD occupancy could gain momentum as planning authorities seek ways to pivot towards more residential given the emptying of office blocks during the pandemic.

Knight Frank residential agent Adam Ross says luxury CBD buyers are looking for such features as large master suites, large living areas, good ceiling heights, great views and a high level of finish.

“Sydney has gone through an incredible change in the off-the-plan luxury space for CBD apartments,” Ross notes.

“For a long time prices averaged around the $20,000 to $30,000 per square metre range, but in recent times we have seen a monumental leap from those price points to $45,000 per square metre to $80,000 per square metre … in the blink of an eye.”

Ross puts the surge down to lifestyle and building amenity, which has changed substantially and quickly in Sydney. “Right now it’s almost a case of ‘name your price’, within reason,” he says. He suggests older prime apartments are seeing a surge because on paper they look like better value, while noting that the frenzied market conditions often result in prices per square metre similar to those of new stock.

“More established projects are again even more sought after,” he says. “Areas like Walsh Bay are seeing a major resurgence as they are perceived to be grossly undervalued given the prices being achieved in neighbouring communities.”

Savills valuer Jonathan Randall says the latest crop of luxury apartments has helped prices grow in older developments, as buyers see good value, they often provide larger internal areas and they can be occupied immediately.

“Older buildings also have a track record in terms of build quality and on-site management, compared to a new project where a buyer is heavily reliant on the reputation of the developer, architect and builder on which to base their decision to purchase,” he says.

Savills agent Martin Schiller says recent resale data is limited but

Left: Penthouse atop the ANZ Tower, with view from the rooftop and interior shots. Below: Pool and view from 111 Castlereagh Street.

anecdotal evidence suggests that some price growth has been achieved in some projects, although significant rental reductions, plus an exodus of investors and a flight to homes outside of Sydney, has affected buyer demand in this sector.

“Confidence levels have now returned to the Sydney CBD,” he says.

Latest developments such as The Opera Residences, Crown and the forthcoming One Sydney Harbour will create their own market, Ray White Residential CBD agent Michael Lowdon suggests. “I suspect that buyers are cashed up with no reliance on finance,” he says. And sellers will be able to hold out for their price.

Lowdon does see some pressure at Greenland Centre, at 115 Bathurst Street, which was sold in 2013. “Everything sold off-plan relatively quickly, and CBRE has since reached out to a wider network of traditional resale agents with Asian networks.” Lowdon says there were 30-plus agents’ open for inspection signs outside the building until recently, when they were discouraged by building management. “All buyers have paid premium prices,” he says.

Lowdon suggests that when new developments are completed, typically between 20 per cent and 40 per cent may be available for sale and “generally this takes up to four years to work through the system”.

Sellers often enter into a cycle of trying to sell and if the sale doesn’t happen falling back into the rental market and then repeating until sold.

Adrian Wilson at Ayre Real Estate affirms the changed priorities of buyers over the past year as they are looking for more space.

He notes a surge in buyer desire for prestige three-bedroom apartments, which he doesn’t believe will dissipate anytime soon. Wilson anticipates a turnover of around 10 per cent to 20 per cent in the new high rises within the first year.

“The case with city buildings is that every building is its own micromarket, and so over time each building tends to form its own marketplace,” he says.