Australia’s largest capital city is in a state of major transformation, with the imminent construction of Sydney’s second airport at Badgery’s Creek paving the way for a new metropolis of three cities that will be home to more than eight million people over the next 40 years.
A new CBRE report ‘Western Sydney Airport: propelling growth in the Parkland City’, highlights the changing skyline of the greater Sydney region, which is expected to see more than half of the city’s population reside west of Paramatta and the emergence of three metropolis’ – the Western Parkland City, the Central River City and the Eastern Harbour City.
CBRE Research Analyst Freddie Kareh said Sydney’s rapidly growing population, combined with the construction of the new Western Sydney Airport, would be catalysts to drive the emergence of Western Parkland City over the next four decades.
“The diminishing availability of employment lands within the Western Sydney region to support the area’s growing population will underpin development in Western Parkland City – positioning this metropolis as one of Sydney’s key growth centres in years to come,” Mr Kareh said.
“Under current land supply and population growth forecasts, we estimate there is enough available land within the existing Western Sydney Employment Are to satisfy demand for another five years. Beyond that, once rental rates become unsustainable, tenants will likely look further afield to new locations such as the planned Elizabeth Park Industrial precinct.”
The report shows land prices for rural, 2ha lots at the planned Elizabeth Park Industrial precinct are currently achieving between $150 – $250 per square metre.
“Taking into consideration these are not zoned or serviced for industrial use, in theory, property investors are today valuing such parcels at a 45% discount to surrounding industrial precincts, which currently achieve between $500 – $600 per square metre,” Mr Kareh added.
According to the research, the emergence of Western Parkland City is also sparking greater demand for developable land in the area.
In the four years since announcement that the Western Sydney Airport would proceed, the price of a 2ha and 10ha block of rural, unzoned land has on average, grown by 32% per annum and 24% per annum respectively. By comparison, the median house price Greater Sydney has grown on average 14% annually over the same timeframe.
CBRE’s Managing Director, Western Sydney & South Sydney, Frank Oliveri said demand from institutional developers looking to secure a footprint in areas surrounding the airport site had increased over the past 12 – 18 months.
“As key milestones are reached on the development of Sydney’s second airport at Badgery’s Creek, the level of interest from groups looking at potential residential and industrial development opportunities in the area strengthens,” Mr Oliveri said.
“With the discussions of this new growth precinct now a greater reality, developers and investors are now willing to pay for that reality.”
An opportunity to acquire a 30-acre landholding in Luddenham – the first on-market opportunity of its kind in the area – is expected to set a new benchmark for industry and development interest in the area.
The 812 Luddenham Road property is situated within direct proximity to the future M9 and M12 Orbital Interchange – providing an attractive opportunity for industrial use in the heart of this future growth area.
CBRE’s Thomas Mosca said the property would ignite interest from international investors, syndicates, institutional developers and high net worth landbank investors.
“With construction on the airport to commence in the second half of this year, the sales campaign is expected to unearth strong interest from institutional groups wanting to capitalise on this prime real estate offering,” Mr Mosca said.
“The property will form part of what is anticipated to be one of the largest industrial hubs in the Southern Hemisphere – offering unparalleled opportunity and growth potential in this everchanging region.”
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