Two Sydney residential developers have splashed out more than $16 million on suburban residential sites in off-market deals at the weekend.
Parramatta-based developer Dyldam snared a site on the Hume Highway in Bankstown with DA approval for 185 apartments, for $11.4 million from a group of five local homeowners.
In Lewisham, developer Peter Sleiman Properties paid $5.25 million for a 1055 square-metre site at 7-15 McGill Street, which has been rezoned for high-density, multi-storey residential use by Marrickville Council.
A lift in apartment sale prices is improving the risk profile of residential projects in sub-city centres, and driving competition among developers for suburban sites, agents say.
“Developments in outer areas have always been hard to make work, but the market has changed and the price of units is going up, and it’s starting to make a lot of these projects viable,” John Hill of John Hill and Co said.
Recent transactions in areas such as Burwood, Bankstown and Hurstville, including Toga’s $99 million Highpoint development on the former Dominelli Ford site, are highlighting the strength of demand in sub-city centres.
A site with DA approval for apartments at 48 Burwood Road, Burwood, sold in January to a private developer for more than $200,000 a unit site.
“We used to be lucky to see $100,000 to $120,000 a unit site in some of these areas, but now it’s up closer to $200,000,” Mr Hill said.
Projects including WestConnex, the Dulwich Hill Light Rail extension and other links strengthening transport to suburbs more than five kilometres outside of the city centre are also driving competition for suburban sites.
“We’re seeing real changes in the urban infrastructure, and developers are more attracted,” Richardson and Wrench agent Nick Countouris said.
“They know a good transport link has that mushroom effect that brings more businesses and general trading in the area,” he said.
Dyldam’s Bankstown site at 350 Hume Highway measures 11,722 square metres. It is currently an industrial park but has been rezoned for high-density residential development and is close to schools, a popular retail precinct and good public transport.
The Lewisham site has the potential for 30 residential units and is well-located to take advantage of the newly opened extended light rail service.
“People are paying serious prices in areas that have recently been rezoned, particularly if they can take advantage of an affordable housing scheme that could increase the [floor space ratio] by up to 0.5 – which can be up to 10 more apartments,” Mr Countouris said.