Sydney's our country's largest capital city and our most impressive property market. Along with Melbourne it contributes the lion's share of our Gross Domestic Product and continues to drive the nation's economy.
Recent data from our expert research team and Samuel Hadgelias the manager of NSW commercial, shows that commercial property should be considered by anyone looking for an investment in this thriving city.
Let's look at the numbers to see how commercial in the Inner Eastern suburbs stacks up.
Inner Eastern Suburbs commercial
Let's look at the numbers to see how commercial in the Inner Eastern suburbs stacks up.
The Inner Eastern suburbs of Sydney include Darlinghurst, Woolloomooloo, Surry Hills and Redfern. These areas are all flourishing thanks in part to their harbourside location, and their close proximity to the city centre.
They offer a wide range of different types and classes of commercial property, and over 2016 Ray White has monitored 150 transactions to the value of $369million. From retail to residential development and even industrial warehousing, the inner east suburbs offer opportunities for investors and owner occupiers of all shapes and sizes.
Sales turnover high
The most vibrant suburb in the Inner East precinct has to be Surry Hills. Once characterised by warehouses and factories, this central hotspot is now home to chic developments and a thriving cafe and bar scene.
Larger assets with yields ranging from 5.5 per cent to 7 per cent, and values exceeding $10million have been the standout performers.
It's no wonder that it attracted the most commercial sales activity in 2016, turning over 69 transactions and almost half of the inner east total. Larger assets with yields ranging from 5.5 per cent to 7 per cent and values exceeding $10million have been the standout performers.
Darlinghurst also saw high sales turnover, with over $100million in sales over 35 transactions in 2016. The suburb's central location keeps demand for office and retail space high year on year. Woolloomooloo and Redfern, on the other hand, saw little sales activity, despite high demand for tenanted properties in the area.
Overall most sales in the area were retail or office space. Due to current high demand and positive forecasts for the future, retail draws particularly low yields of around 4 per cent. With most indicators identifying the inner east as an outstanding investment market, buyers should take note as it's likely to only improve in the near future.
Varying capital values
Hugely varied property values highlight the diversity of the Inner East's commercial stock. Perhaps thanks to a larger sample size due to high sales, Surrey Hills had a particularly varied range of capital values in 2016 - between $7,800/sqm and $20,000/sqm with the highest average value of $13,592/sqm.
Redfern and Darlinghurst returned similar results, with an average value of around $11,000/sqm, while Woolloomooloo's high volume of commercial and office assets pushed its average value higher to almost $14,000/sqm.
There is a diverse range of commercial properties available in Sydney's inner east suburbs.
The reasons for increases in demand and value for offices in the inner east, can be attributed to the low vacancies in the central business district. Businesses are looking slightly further out to get more for their money, and choose from a wider range of properties and find something better suited to their needs.
With few signs of vacancies decreasing and demand remaining high, it's likely that capital values will continue to increase in the area for the near future.
Days on market show high demand
Commercial properties in Sydney's Inner Eastern suburbs don't last long on the market, according to Ray White research. Darlinghurst and Redfern properties went extremely quickly with an average of 35 days, across 2016. This shows the high demand in the area, especially for smaller assets of around $3million which are considered affordable and are thus highly sought after by owner occupiers and the smaller investment market.
Woolloomooloo and Surry Hills took on average 43 and 69 days to sell, respectively. These longer sales periods are down to the complexity and size of the sales in the area, rather than a lack of demand. The larger assets that are typical in these areas require a more specific buyer and of course a longer due diligence.
With such a wide range of properties available the Inner East is attracting everyone from small investors searching for affordability, through to larger buyers looking for development opportunities and office buildings. With demand so high, interest rates remaining low and no signs of a slow down for Sydney as a city, it's likely that capital values will continue to increase, and rental yields will continue to decrease.
Get the right advice and finance and you too can make the most of this burgeoning investment location.
