- New South Wales update
The NSW government has continued to commit to the growth and expansion of Western Sydney.
In September 2016, the NSW Government announced that it was on track to deliver its biggest ever government agency leasing commitment in Western Sydney. The Minister for Finance, Service and Property, Dominic Perrottet, announced that the Government had formed a shortlist of candidates to submit detailed proposals for up to 62,000 square metres of new a-grade office accommodation in Sydney’s West.
The leasing solution will accommodate at least 4,000 public service roles in Western Sydney, with around 1,700 of those roles relocating directly from the CBD. The Government’s plan, first announced last year, includes the creation of a Western Sydney Planning and Environment “hub”, consolidating around 2,500 roles from the Department of Planning and Environment, the Office of Environment and Heritage, and the Environment Protection Authority.
Approximately 1,600 roles from the Department of Finance, Services and Innovation will also be accommodated as part of the leasing search.
Separately, another milestone was reached in October with the commencement of construction of a new development in Parramatta to house 1,800 Department of Education staff, previously located in Sydney’s CBD. This will consist of a move to a purpose-built 25,000sqm development at 105 Phillip Street. Dexus Property Group and Built will deliver the development for the Department of Education that will feature an expansive communal rooftop terrace with an outdoor dining area and sports court.
Parramatta is receiving a lot of attention of late, and the level of development activity is set to accelerate. Parramatta’s economic growth rate is expected to double by 2021, resulting in 22,000 additional jobs and a further 41,000 residents.
New draft design guidelines to increase appeal of medium density housing options
The release of a draft Medium Density Design Guide by the NSW Government will help make it easier to build well-designed low rise, medium density homes across NSW.
The code will allow a range of homes – including townhouses, terraces, dual occupancies and manor homes – to be assessed as complying development as long as they meet specific design standards. This should save time and money for homeowners and developers.
Planning Minister Rob Stokes said the draft policy is intended to encourage more and better designed terraces, townhouses and dual occupancies (two houses on one block) in response to demand for this versatile housing type. The Government also believes that the new code may go some way to increasing affordability in Sydney’s heated housing market.
The CoreLogic Home Value Index puts Sydney dwelling price growth at an astonishing 10.21% annualised increase on last year as of 30 September 2016. House values are up 10.62% and unit values have increased by 8.26%. With a record number of apartments being approved and constructed and banks being more stringent in their lending to foreign purchasers, settlement risk is starting to be a hot topic as a number of developments come to completion.
The CBD office market remains tight with overall vacancy rates down to 5.6% according to the latest Property Council of Australia (PCA) Office Market Report. Vacancy rates for most office grades have decreased compared to 12 months ago. This is largely due to an expectation that ~150,000sqm of space will be withdrawn from the market by the end of 2017 as the building of the Sydney Metro continues and lower grade buildings are converted to residential zoning. According to observations by Colliers and Savills, the reduction in vacancy rates is leading to rents being aggressively increased and a reduction in incentives.