If you’re looking for the next property investment hotspot, the western Sydney suburb of Liverpool has the savviest property investors signing on the dotted line, courtesy of the area’s strong investment fundamentals.
In recent years, Liverpool – located in the South-West of Sydney – has been the focal point of a perfect economic storm. The suburb’s pre-boom statistics already stack up well in comparison to Melbourne’s CBD. Despite what seems like an unfair comparison, according to CoreLogic, Liverpool’s median weekly rent for a unit is currently $380 and yields a rental return of 4.4%, which isn’t that much below that of Melbourne’s CBD, which sits at $550 per week and 6.5%.
And while cash flow might allow you enter and stay in the market, it is capital growth – the increase in the market value of your property – where the real money is made. Research by Aussie Home Loans and CoreLogic found that in the 25 years between 1993 and 2018, the average unit price in Sydney increased by $589,850 (that’s $23,594 per year or $65 per day) compared with Melbourne’s increase of $458,275 ($18,331 per year or $50 per day). And Sydney’s growth – particularly in the south-west – is all about to change… big time!
The site for Sydney’s second airport, Western Sydney International Airport (Nancy Bird-Walton) which will eventually be twice the size the Sydney’s current Airport, has been announced to be located at Badgerys Creek, which is just to Liverpool’s west. The Western Sydney Aerotropolis, an aerospace, engineering, science and business hub built around the airport and make a significant contribution to 200,000 new jobs, has also been revealed. Between these two projects, what was once a sleepy patch of farmland in Sydney’s South-West will soon be one of the most economically important areas of Sydney. And Liverpool is perfectly placed to capitalise on this growth.
In response to the upcoming developments and the influx of people and businesses that they will trigger, the Liverpool City Council has rezoned 25 hectares in the suburb’s heart. This will see the residential population almost double and transform the city into a vibrant economic hub with an 18-hour economy, in line with the Sydney and Parramatta CBDs. This shift has caught the eye of local and international companies with the Western Sydney International Airport (Nancy Bird-Walton) headquarters basing themselves in Liverpool and Amazon to open its first NSW fulfil centre next door at Moorebank, no doubt many other companies are likely to follow.
In short, no other suburb in Australia is likely to experience the sort of growth and development that Liverpool will over the next decade. And there’s a way that the public can capitalise on Liverpool’s impending growth, even if they don’t plan to live, work or even travel to the area.
The Liverpool investment proposition
Imagine being able to invest in property in or near a CBD before it becomes a CBD – getting in on the ground floor in London, New York, Beijing or indeed Sydney. When the area eventually turns into an economic hub, the growth of your investment would be exponential. Unfortunately, for most of the world’s major cities, these opportunities only existed decades, sometimes centuries ago.
It’s this fact that makes the Liverpool proposition so exciting. Here is an area that is on the verge of turning into an economic hub, but that hasn’t made the leap just yet. When it does, however, the value of property is expected to explode. Not only could such investment support itself, but it could also support its investor too, through spectacular capital growth and above average rental yields.
With Amazon and other multinational corporations choosing the Liverpool area as their base, the city is set to become a magnet for young professionals. These are the exact type of high calibre tenants that property investors dream of – the ones that will pay higher rent, sign longer leases, and treat the property with the utmost respect.
Getting in on the ground floor
The potential of Sydney’s third CBD is plain enough to see. But how challenging is it to act on the opportunity? Thanks to some forward-thinking property developers, it isn’t difficult at all.
On announcing Liverpool City Council’s plans to turn the area into an economic hub, Mayor Wendy Waller mentioned that the council had been talking to around a dozen developers about projects worth up to $1 billion. And since the announcement, the change in the area surrounding the rezoned CBD has been stark and will allow a modern, vibrant, 18-hour economy to flourish.
Developments like Coronation Property’s The Paper Mill Precinct have already offered hundreds of professionals a place to call home – and thousands more, in the future. Such is the transient nature of modern-day work that these professionals might only stay a handful of years in their company’s Liverpool office before being moved somewhere else, and will, therefore, look to rent a property rather than buy. And it’s these professionals that investors can offer their property to in order to maximise rental yield.
A rare opportunity
A period of unprecedented growth is about to hit Liverpool. And this isn’t just the perfect economic storm for the local council or the multinational corporations looking for an Australian base – if you recognise the opportunity, and are brave enough to act, you could reap huge benefits.
As a current example, based on third party advice a two-bedroom apartment in The Paper Mill Precinct has the potential to earn investors $43 a week within the first year (taking into consideration all outgoings and assumptions), which would equate to an annual cash surplus of $2,229 per annum. And while the apartments are currently quite affordable, properties in Liverpool are set to explode in value. The sooner you invest, the greater your reward will be.