Knight Frank reports record commercial property sales in NSW over June quarter

“That’s off the back of such a strong residential market,” said Knight Frank associate director investment sales Anthony Pirrottina, who was involved in many of the deals. “Developers were very quiet just before COVID-19 and we had that period where everyone was afraid of buying off the plan.

“As a result, there hasn’t been any new supply for a while but now with prices heading skywards and the residential market running strong, development sites have been in huge demand. These sites are particularly sought-after in lockdown periods as it’s not necessary to carry out physical inspections.”

The sites sold included one at 16-18 Willandra Street in Lane Cove North – with a DA already approved for a townhouse development – which went for $6,535,000, another at 1-5 Stanley Street, Kogarah, which was bought for $9,012,400, and a third at 248-250 Marrickville Road in Marrickville which was purchased for $7.67 million by the publisher of Rolling Stone Australia magazine and which is set to be a live music venue and offices.

A fourth site was at 527 Victoria Road, Ryde, approved for a boarding house development, that was snapped up for $1.4 million.

“That affordable end of the market is particularly strong with residential prices going up so high,” Pirrottina said. “The bottom part is in a lot of demand, as many people can’t afford the prices of houses and units, and are going for new-generation boarding houses instead.”

Knight Frank reports that Sydney’s investment market over the first half of 2021 was the strongest it had been in years, with a 100 per cent clearance rate. There wasn’t a single property over that six months that didn’t find a buyer.

Even strata offices in the Sydney CBD found a lot of competition among buyers, particularly after the state government announced the compulsory acquisition of three strata-titled buildings to clear the way for the Sydney Metro’s western line. Prices per square metre even broke records four to five times in the space of just five weeks.

“Those buildings have to be vacant possession so we’re seeing a lot of demand from companies who have to relocate,” said Knight Frank investment sales executive Andrew Harford. “It’s also creating a shortage in the supply of strata offices, and demand is strong particularly for sub-150-square-metre properties.

“Companies aren’t needing as big a footprint as they maybe had before in the CBD, but they still want to be there. [This is] allied with low interest rates and a lot of competitive debt around at the moment. Probably 80 per cent of the buyers are owner-occupiers, and 20 per cent investors. “

There’s a lot of pent-up demand at the moment from companies and investors who’d put their buying plans on hold during the pandemic so far, but were now gaining confidence, Pirrottina said.

“There’s also a bit of psychology there, with people thinking that when Asian buyers are allowed back in, they’ll be buying a lot, which will push the market up,” he said. “But even now they seem happy to pay top prices for the kinds of property they want.

“And you can see the market diverging between those properties that you almost can’t give away, like aged care and cafes, which have really struggled during lockdowns, and then the property that’s more resilient to COVID, such as supermarkets, pharmacies and service stations, that have really gone through the roof.”