Sydney is missing out on new high-quality apartments as developers increasingly head north to Newcastle to take advantage of strong population growth, huge infrastructure investment and more affordable living.
The city, 160 kilometres away from Sydney, is experiencing a boom in high-quality apartment construction, with supply predicted to continue well into the future.
“Newcastle is a smaller city and it’s probably a different level of financial commitment while the councils in Sydney are different,” said Warwick Miller, chief executive of Miller Property Corp, who’s developed a number of apartment projects in Newcastle – and only his own home in Sydney’s Point Piper.
“I suppose I never choose to develop in Sydney because it’s a lot bigger a deal than Newcastle. And the lifestyle up here is very attractive with its beauty and nature and fishing and sailing.”
Miller’s latest Newcastle development, Verve Residences, 209 apartments over the two tallest 20-storey towers in the city, have just won three prestigious architecture awards for the region and, to add insult to injury, it’s now been shortlisted for the overall NSW titles.
Fellow developer Luke Berry of the Thirdi Group, which has developed a large number of apartments in Sydney, is also now doing major projects in Newcastle, including the major West End development. He’s just launched his latest big residential project of his 650 to 700 apartments for the precinct, two towers with 155 units overlooking the harbour, called Stella.
“Newcastle for us is a hidden gem,” he said. “Land is cheaper and the build price is less relative for the product you’re building with finishes that need to be the same standard as Sydney finishes.
“But Novocastrians are sensitive to good brands and it gives us the opportunity to bring some Sydney flair to Newcastle, like home automation. We have close to $50 million in capital that we want to leave in Newcastle so we can reinvest there. So our commitment to the city is long-term, and we’ll be building there for the next 10 years.”
Other developers with major projects in Newcastle include the Canberra-based Doma Group, Iris Capital, which has been particularly busy in Newcastle’s East End and Hunter Land.
Certainly, Newcastle now has the size, and growth, to attract the big players in the development world. With an estimated population growth of 19.47 per cent between 2020 and 2041 according to demographers idcollective, Greater Newcastle is now Australia’s seventh largest city and its biggest regional economy, generating an estimated $34.5 billion in output, on ABS figures.
In addition, there’s been a large amount spent on the city’s infrastructure with $510 million spent on a new transport system, with light rail replacing the heavy rail in the city centre, new business parks, $200 million being spent on the redevelopment of the former Store Site, and $780 million of pledged investment.
Property values are rising too, with Domain Group figures showing that apartment prices in Newcastle have risen by 47.2 per cent over the past 10 years. But the median price of a unit still compares favourably to Sydney: $515,000 as against Sydney’s $735,387.
Brent Sinclair, Knight Frank’s Newcastle director, joint head of department, sales & leasing, says Newcastle is doing extremely well, especially when compared to Sydney. “We are definitely attracting developers from the capital cities like Sydney,” he said. “Certainly, over the past few years, we’ve been riding a residential boom and the bigger players have come in and capitalised on the momentum.
“We’re absolutely getting a lot more interest from the Sydney market. And the apartments being built have a lot of local buyers as well as investors attracted from outside to Newcastle by the price point, and owner-occupier interest because of the harbour, waterfront, ocean, lifestyle and jobs.”
For developers, land is a lot cheaper in Newcastle and both construction costs and developer contributions are less, says Dane Crawford general manager at Newcastle agents Commercial Collective. That means an apartment with a harbour view in Newcastle, for instance, is generally around half the cost of one with an outlook over Sydney’s harbour.
In addition, there are plenty of jobs from a rapidly diversifying local economy, great beaches, vineyards and lots of good cafes, restaurants and bars. On the other hand, there’s less traffic and fewer people which makes the city easier to navigate.
“It’s for those kinds of reason we’re seeing a lot more Sydney net migration here,” Crawford said. “The number of Sydneysiders buying here has been increasing year-on-year and it’s not uncommon for us these days to experience 20 per cent of our inquiries from Sydney.
“Some have already moved to Newcastle but others are investing here with a view to moving here in a couple of years. The kind of apartments being built here are high quality and sophisticated and appeal to all tastes. Newcastle now presents a really viable alternative to Sydney in that development space.”
Miller, who sold his home in Sydney, the waterfront estate Routala, in 2007 for a then Australian record of $28.75 million, sold apartments in Verve for around $475,000 for a one-bedder. He’s soon to launch another Newcastle development, Horizon, on the harbour in the prestige Honeysuckle precinct.
“The buyers for Verve would be wealthier 50-plus people and quite a number come from outside Newcastle, either from Sydney or the Lower Hunter,” he said. “I think every place has its turns.”
Sinclair agrees. “But with Sydney’s massive price growth, Newcastle now offers disproportionate value for money,” he said. “It’s hard to go past our lifestyle, too. As an alternative to Sydney, it can’t be beaten.”
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