Capital Values Rise in Sydney Northern Beaches Commercial Sector
A combination of limited stock, rising demand and expected population growth has resulted in higher capital values and investment yields for commercial property on Sydney’s northern beaches, a report by Ray White Commercial has found.
Nic George of Ray White Commercial NSW said low interest rates and limited industrial land availability has helped boost land values and resulted in a new level of investment yield achievable, particularly in the sub $1.5 million price point.
Nic George said land development in the Warriewood Valley and Ingleside regions along with high rise development in suburbs such as Dee Why has had a major impact on the region.
“In the past 20 years population growth has been minimal compared to the other regions of Sydney, but over the next 20 years there is an expectation of an additional 35,000 people residing within the northern beaches,” he said in the Between the Lines – Northern Beaches Retail and Industrial Overview May 2017 report.
Nic George said investment activity in the northern beaches industrial market was down in 2016 but mainly due to a restriction in available stock with the average price of $1.22 million highlighting the demand for smaller strata type industrial stock.
“This is highly driven by local businesses that are seeking to upgrade to larger premises or sheltering from the increasing cost of occupying premises in this location,” he said.
“Local private investors are also capitalising on the inherent demand in this region resulting in strong yield compression with yields as low as 3.50 per cent.”
Ray White Commercial Head of Research, Vanessa Rader, said industrial capital values across the northern beaches over the last 12 months have shown some variance depending on location, age and quality.
Vanessa Rader said the most affordable regions are Brookvale and Frenchs Forest, with Brookvale yields ranging from $1,500 to $3,800 per sqm with the upper range more representative of showroom industrial properties.
“Frenchs Forest is home to a large volume of strata industrial premises; these more uniform properties may include some office component and sit within a more restricted value range of $1,700 to $2,900 per sqm,” she said.
“The Warriewood region also includes greater showroom type premises which have resulted in a similarly broad range as Brookvale with an average of $3,377 per sqm. Cromer and Belrose offer modern industrial facilities with some new supply being added in this region demanding a higher value, Cromer within $2,500 and $3,800 per sqm while Belrose with some greater retail and office components has a slightly higher range up to $4,200 per sqm.”