Ideal conditions for Sydney property investment as the CBD experiences a cosmopolitan makeover

Written by Carlie Ziri in Investment on August 31, 2012

Sydney’s most inner city area – spanning from Darling Harbour to The Rocks – has undergone a cosmopolitan makeover in recent years with new property developments attracting an influx of diverse, wealthier residents.  Currently, conditions are ripe for investors looking to buy in the Sydney CBD, with rental demand being driven up by affluent, corporate executives attracted to the lifestyle that accompanies inner city apartment living.

A great long-term investment

According to recently released 2011 ABS Census data, the number of dwellings in the Sydney 2000 postcode has expanded by 20 per cent over the past five years. The median weekly rental price is up a staggering 33.3 percent to $600 (up from $450 in 2006), and the average weekly household income has increased by 30.5 percent to $1,422.  Rental demand is currently at its peak for properties ranging, from $500 – $1200 per week, however there is a shortage of supply.

Over the past five years we have also seen Sydney’s CBD age, with close to three in five (58.7%) inhabitants now aged 25-54 – an increase of 6.2 percent over five years. Conversely, the proportion of 15-24 year olds has contracted to represent under a quarter of the population at 23.6 per cent (down from 28.4% in 2006).

In this time we have seen some amazing new city developments including The Residences, The Hyde and Lumiere, which have been built to cater to the city’s evolving demographic – a sophisticated buyer that appreciates quality and lifestyle.

There is definitely an opportunity for investors looking to buy in the Sydney market. With the city’s continued capital growth, fabulous rental yields and other tax benefits – an inner city apartment is a great long-term investment.


Modern-day ‘Aussie’ dream

A growing number of Sydneysiders are shying away from the great Aussie dream of a home with a backyard and pool, in favour of an inner city pad. Empty nesters are growing tired of maintaining large homes once their children have moved out, and younger executives love being so close to work and adore the vitality, convenience and cosmopolitan vibe.

Residences in the north of the CBD are the most sought after with the highest property values in the city and continued solid growth.  The northern tip of the city has the perfect combination of established residential buildings such as Observatory Tower and Cove Apartments; new buildings including The Stamford Residences; and the pending Barrangaroo development. Many of these properties also have fabulous water and harbour views adding to their desirability factor.

The census data also reveals that while Australian-born residents now represent 19.1 percent of the Sydney 2000 area, up from just 15.9 percent in 2006; there has also been an increase in international residents particularly from Asian countries including China (11.9%), Indonesia (8.5%), Thailand (8%) and South Korea (5.5%).

The beauty of inner Sydney is its diversity. International residents prefer city apartments due to the accompanying lifestyle, and also their ability to purchase properties off the plan in upcoming developments.

Now is the ideal time for investors to purchase a Sydney city apartment. Barring any catastrophic economic events or devastating natural disasters like those that dominated the market in 2011, we are conservatively tipping that median property prices in Sydney will rise by around 2-3% in 2012.