Tourism and infrastructure drive inner city living
The Apartment Specialist
Newcastle is maturing into a metropolitan city with an incredible lifestyle – facts that can’t be denied. Combine this with the current infrastructure and construction spend as well as increased exposure from events such as the Supercars, our city is in a prime position to be the nation’s next apartment hot spot.
We are often compared to the Gold Coast because of our beaches, coastal lifestyle and being a regional city close to a capital centre. Many would argue our differences.
Though, Newcastle has one distinct advantage, we are closer to Australia’s largest city – Sydney.
With the Gold Coast’s second coming of age from a holiday destination to a sophisticated metropolis, there are even more similarities. Its transformation has been contributed to two economic drivers – tourism and infrastructure – that have been fuelled by it hosting the Commonwealth Games in April 2018.
It is estimated $17 billion has been spent on infrastructure that includes Pacific Fair expansion; the light rail; The Star (formerly the Jupiter’s Casino) development and the airport upgrade.
This expenditure has attracted a surge of property buyers, the strongest since the Global Finance Crisis. The unit prices have jumped by 5.1 per cent in the past year according to a Core Logic report. This growth is expected for a couple more years due to the Games plus the release of 1200 apartments after the event.
Newcastle, as it matures from its industrial roots into a cosmopolitan city, looks as though it is on a similar trajectory.
For a start, we have very similar economic drivers. Newcastle has been put in the international tourism spotlight from the women’s soccer blockbuster at McDonald Jones Stadium and the Supercars returning each November for the following four years.
Then there is the estimated $6.5 billion infrastructure investment that includes the light rail, transport interchange, cruise ship terminal, CBD revitalisation and airport upgrade. Plus we have the impending tertiary education wave with Japan’s Nihon University campus at the old courthouse and the University of Newcastle looking to expand its city campus to Honeysuckle.
These drivers have assisted more than a $1billion in building approvals in the past year. The city’s high-rise limit has lifted to 66 metres or 19 levels. Many existing buildings are being restored and renovated, so the city’s character is being enhanced with more depth and a metropolitan vibe, as its heritage and culture blends with new developments.
All this activity has attracted international, national, regional and local investors as well as retirees, downsizers and lifestylers to buy apartments in the city.
In the past 12 months the median unit price has been $601,500 and given investors the capital gain of 21.76% against the NSW figure of 8.01%. (Your Investment Property Mag, September 2017). Since June, I have seen sales ranging from $357,000 for a studio through to $1.8 million for a three-bedroom penthouse. There has also been a trend towards buyers seeking out particular developments and securing them before the public market is aware.
Sydney buyers, in particular, marvel that the properties are about half the price, closer to the city, harbour and beach as well as a more laidback lifestyle. Apartments in Bondi range from $25,000 to $40,000sqm where in Newcastle’s East End across from the beach, a recent benchmark was $14,666sqm. Newcastle’s reputation as an apartment market with value and potential growth will continue to gain momentum. I believe 2019 will be the litmus test year as major infrastructure comes online.
By 2022, we can expect to see a skyline dominated by cranes as construction booms across Newcastle’s CBD and spills into neighbouring suburbs. Within 15 to 20 years, it is projected there will be more than 1200 new apartments in the city, which will help accommodate the predicted population growth of 33,300 people across the LGA.