PARRAMATTA ROAD HONEY POT FOR DEVELOPERS
Written on the 7 March 2016 by Nick Nichols
THE Parramatta Road corridor has become a honey pot for developers ahead of the NSW Government's review of public submissions on its long-awaited strategy for the major arterial route.
Property agency CBRE has revealed that developers are positioning themselves in the market through off-market deals and option agreements to secure holdings, largely targeting properties without any development approvals in place.
The draft Parramatta Road Urban Transformation Strategy encompasses eight key centres along the 20km corridor, namely Granville, Auburn, Homebush, Burwood, Kings Bay, Taverners Hill, Leichhardt and Camperdown.
The proposal is a key platform of the government's strategy to accommodate an expected population growth of 1.6 million people in Sydney over the next 20 years.
The government's vision for the corridor includes high-density housing to cater for an extra 30,000 dwellings by 2031 plus a new rapid transit route linking Burwood and Strathfield to the Sydney CBD. Also on the table is a potential light rail route between Strathfield and Parramatta.
The government is currently processing public submissions to the draft strategy, but over the past year developers have taken a proactive approach by seizing on potential rezoning opportunities in the corridor which takes in a block on either side of Parramatta Road.
CBRE has reporting a rush of property deals, including the acquisition of houses in one line by some investors.
Nick Tuxworth, CBRE's manager of capital markets, says recent sales include the purchase of a group of Burwood properties in one line. The properties, at 2, 4, 8 and 10 Hornsey Street, 2-4 Stanley Street and 7-13 Conder Street, were acquired for a total of $9.65 million.
Another single deal for 9-13 Gloucester Avenue in Burwood was secured at $7.6 million.
"Off market deals are occurring, with developers buying up houses in a line or offering options to home owners to purchase their properties subject to rezoning occurring as part of the New Parramatta Road urban renewal," says Tuxworth.
"The majority of the transactions that have occurred in the past 12 months have involved local developers.
"However, with the Australian currency underperforming we are likely to see more foreign capital, particularly from China, looking at these types of development opportunities."
Tuxworth says sites without development applications were viewed more favourably and were in greater demand.
"While the market's perception may be that development site acquisitions are slowing down, from the conversations that we have been having with developers, there is still significant activity."
However, CBRE has also issued a warning to prospective buyers and sellers, arguing that without clarity from the government they could get burnt.
"Home owners likely to benefit from the New Parramatta Road uplift should be prepared in terms of understanding the procedure of selling amalgamated sites," says CBRE's Victor Sheu.
"They also need to recognise that, until there are any public exhibitions or official announcements, it is extremely difficult to provide definitive advice on site values because of the potential pricing fluctuations and demand changes that could occur in the market for residential developments."
Author: Nick Nichols