- Next investor hotspots
What are the next suburbs that are ripe for investment in Sydney, Melbourne and Brisbane? We sat down with Grant Thornton’s real estate and construction industry consultant, John Elvy, to discuss his thoughts on how rezoning and infrastructure plans often reveal these investor hotspots in advance.
You’ve noted that it was just a matter of time before certain areas of Sydney were going to be rezoned residential. Could you expand on that?
Across Australia local governments operate in a relatively similar manner. In New South Wales, the Roseberry/Alexandria/Waterloo/Mascot area has become far more residential in the past five years, and this is due to people’s desire to live closer to the city and to transport hubs. Therefore, developers are prepared to pay more for a site that’s currently zoned industrial, with the intention to develop it as a residential site.
When do you see the rezoning taking place?
I don’t have a crystal ball, but I can assure you the way those areas (listed above) have been tracking in the last five years, they will, eventually, end up as residential environments.
The market is heavily influenced by new infrastructure – the M2, the M5 and the M7 (in NSW), are all examples of how major transport links influence the relocation of businesses and assist in opening up new land for housing. Once those transport corridors are built they add immediate value to surrounding properties. Meanwhile, people currently occupying industrial or warehouse-type properties in the inner city can’t afford to be there because the land’s too valuable, so they relocate along these major transport routes.
I advise a number of local government areas in metropolitan Sydney and their zonings are currently under review. In Western Sydney, where you have quite a lot of industrial land, owners are being priced out of the market because the value of that land is maybe half to a third less than what it would be as a residential site.
State and Local Governments are recognising this demand. I’d say most local government areas in metropolitan Sydney would be looking at their zoning strategies.
The vast majority of Sydney’s population is now centred around the south west, Parramatta and north west locations of the metropolitan area. City-based businesses are recognising the need to be in the Parramatta local government area (“LGA”), and this is driving investment and housing demand. I believe businesses and population will continue to move west, as can be seen from the growth occurring in the Penrith region.
Here in Sydney we’ve had a housing shortfall for many, many years. The way things are now we’re probably facing a shortfall for at least the next five years. Councils increasingly are recognising the need to identify strategies to increase residential growth.
So what you’re seeing is a major infrastructure boom driven by the NSW Government and strongly supported by private investment.
What about Brisbane and Melbourne? What areas there strike you as ripe for development?
Melbourne city residential demand has grown exponentially over the past five years and continues to be a very popular destination for investors. Melbourne east is starting to transform from being, historically, an industrial area to a more residential area. Areas like Templestowe, Doncaster, and Lower Plenty will go through a similar transformation.
Brisbane and its suburbs to the north and south are also changing. Housing demand is strong in the inner Brisbane suburbs and the city. The Sunshine and Gold Coast markets have improved and seem to continually attract lifestyle residents and investors.
Are you willing to give us your prediction of the next hot spot?
The next major hub is Parramatta. It’s in a major growth phase right now; it’s already Sydney’s second CBD, and in the next five years it will be a very substantial business precinct. Penrith, Campbelltown and Liverpool will follow, while Blacktown is more residentially focused. I think Newcastle is going to go through the roof; and the Illawarra’s are starting now, particularly around Wollongong.
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John Elvy is a Grant Thornton Australia real estate and construction industry advisor. John has worked in the real estate and development profession for over 40 years, advising on property investment strategies, project development and building national and international property networks.
John was an Executive Director with Colliers International and Knight Frank; Managing Director of LJ Hooker Limited, then Chairman of the LJ Hooker Commercial Group. As Executive General Manager Development of Leighton Holdings Limited, John sourced commercial projects in South East Asia and the Middle East. He retired in 2013 as Chairman of Leighton Properties, spending over a decade as a Non-Executive Director.
John has also served in local government, as a City of Sydney councillor, and Mayor of Strathfield Municipal Council. He is currently the NSW Vice President of the Property Council of Australia.