A potent combination of limited stock, rising demand, and anticipated population growth has resulted in higher capital values and investment yields for commercial property on Sydney’s northern beaches, according to a new report by Ray White Commercial.
Ray White Commercial NSW’s Nic George said low interest rates and the limited availability of industrial land have helped boost land values, resulting in greater investment yields, particularly in the sub-$1.5m price point.
George said land development in the Warriewood Valley and Ingleside regions, along with high-rise developments in suburbs such as Dee Why, has had a major impact on the region. “In the past 20 years, population growth has been minimal compared to the other regions of Sydney, but over the next 20 years there is an expectation of an additional 35,000 people residing within the northern beaches,” George said.
According to Ray White Commercial, investment activity in the northern beaches industrial market was down last year, mainly due to a restriction in available stock. The average price point of $1.22m highlighted the demand for smaller strata-type industrial stock.
“This is highly driven by local businesses that are seeking to upgrade to larger premises or sheltering from the increasing cost of occupying premises in this location,” George said. “Local private investors are also capitalising on the inherent demand in this region, resulting in strong yield compression with yields as low as 3.50 per cent.”
Vanessa Rader, head of research at Ray White Commercial, said industrial capital values across the Northern beaches over the past 12 months have shown some variance, depending on factors such as age, location, and quality.
Rader said the most affordable regions are Brookvale and Frenchs Forest, with the former’s yields ranging from $1,500 to $3,800 per square metre, with the upper range more representative of showroom industrial properties.
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