The Manhattanisation of Sydney
Sydney’s city skyline is being transformed into a mini Manhattan as luxury residential towers are soaring out of the ground to replace the increasingly embattled office skyscrapers.
They are seen as the “new black” with developers, high net worth investors and super funds betting on the sector providing significantly improved returns.
While not in the same scale as New York, the new towers will provide a striking skyline and a busier city and harbour surrounds. It is being dubbed the “Manhattanisation” of Sydney. Melbourne is not far behind with the beleaguered Docklands zone also offering new places to live.
Lendlease and Cbus are leading the charge in Sydney with the latest projects at One Circular Quay on Alfred Street, One Sydney Harbour at Barangaroo, as well as 111 Castlereagh Street, atop the new Westfield Sydney luxe retail precinct.
Tony Lombardo, Lendlease chief executive said at the group’s annual results that the business intends to expand its luxury residential portfolio, which already boasts some of the most sought-after blocks in Sydney and Melbourne.
As part of its strategy to be an Australian-based business, the group will pump cash into what it calls urban living assets. He said the company has a pipeline of about “$40 billion worth of opportunities”.
He said in addition to the City project Lendlease has the 1 Darling Point Road, in Sydney’s Eastern Suburbs, in conjunction with Mitsubishi Estate Asia.
“That builds on our strength in luxury residential. I believe we are the market leader with what we’ve done in the last few years on Barangaroo, the One Sydney Harbour development, which has been a defining luxury product, and now we’ve followed that up with One Circular Quay, which is the sixth joint venture which we’ve done with Mitsubishi Estate Asia,” Lombardo said.
“My team is very, very focused on this. This is an area that we’ve got a significant competitive advantage, and we’ve built a brand and reputation that we deliver great quality product, and I think we’re the trusted brand in that space, so we expect the group to really focus [unclear] through residential.”
While the cost of living is tight for most of the population, four Australian cities have recorded positive growth in luxury residential property prices over the past year amidst a slowdown in growth globally, according to Knight Frank’s latest research.
Knight Frank’s Prime Global Cities Index (PGCI) for the second quarter 2024, which tracks the movement of prime residential prices across 44 cities worldwide, found annual price growth had slowed from the 4.1 per cent seen in the first quarter to 2.6 per cent in the second quarter.
The report shows that Perth, Sydney, Brisbane and Melbourne recorded positive growth in luxury residential property prices over the past 12 months. Perth recorded the strongest growth at 3.7 per cent followed by Sydney at 3.1 per cent, Brisbane at 2.4 per cent and Melbourne at 0.8 per cent.
Adam Ross, associate director at McGrath, Knight Frank’s partner in Australia, said Sydney’s prime market was performing well, particularly the super-prime market, of $10 million-plus properties.
“Growth in the super-prime segment of the Sydney market continues in 2024 as we face an ongoing lack of supply coupled with healthy levels of demand,” Ross said.
“In the calendar year of 2023 there were over 310 transactions recorded exceeding $10 million. Looking at 2024 to date, we are three quarters of the way through and have just surpassed 150 transactions.”
Ross said historically, there has always been a surge in sales as the year closes out but at this rate it’s unlikely we will come close to last year’s volume due to the lack of supply.
Cbus is close to opening its $1 billion 111 Castlereagh Street site which is a 22-storey tower will a collection of one-, two-, three- and four-bedroom luxury residences and penthouses that can be customised to suit each resident.
The penthouses feature their own distinctive colour palettes, boasting natural stone floors and sculptural brass joinery, for an elevated sense of living.
“Exclusive to residents, the private rooftop oasis features a private swimming pool, gym with outdoor yoga facilities, podium gardens and extensive wrap-around terraces,” Cbus Property chief executive Adrian Pozzo said.
At the Lendlease One Sydney Harbour site the Residences One has 72 storeys with 315 apartments; Residences Two has 68 storeys with 322 apartments and Waterman’s Residences has 30 storeys with162 on-market apartments.
It has sold more than 90 per cent of One Sydney Harbour and over 80 per cent at One Circular Quay where it has 58 storeys, 158 apartments.
In Melbourne, its Regatta at Collins Wharf has over 80 per cent of the Ancora project of 28 storeys and 303 residences and the Regatta tower of 29 storeys and 317 residences. The Melbourne Quarter East Tower is 100 per cent sold.
“I see a number of baby boomers looking to downsize and they’re looking for trusted delivery partners to buy from and then the multifamily build to rent sector, we’re seeing very low vacancies in rental product in this country. It’s an area that we’re focused on,” Lombardo said.
“We see there are great opportunities as the government has rolled out their metro station developments across Victoria, NSW and the like. We see opportunity to do a number of those infill type developments into the future, so the team is very heavily focused on that.”
