sydney apartment market udia nsw urban icon research breakfast · sydney is the 2nd least...

SYDNEY APARTMENT MARKETUDIA NSW URBAN ICON RESEARCH BREAKFASTPRINCESS VENTURA

AGENDA

Where are apartment developments occurring?

Who lives in apartment?

Potential apartment sites

Affordability story

Build to Rent is coming to Australia

Conclusions

WHERE ARE APARTMENT DEVELOPMENTS OCCURRING?

Apartment hotspots: 2011–2016

Renters 2016

WHO LIVES IN APARTMENTS?

APARTMENTS NOW MAKEUP 30% OF ALL DWELLINGS

27.6%

59.0%

12.8%

0.6%

30.0%

55.3%

14.0%

0.7%0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Apartment Separate House Semi-detached Other

2011 2016

+79,290

+7,720

+39,360

+3,590

AND IN THE HOTSPOTS, APARTMENTS ACCOUNT FOR 80%+ OF DWELLINGS

+1,527

+3,072+2,747

+1,946

+1,960

0%

20%

40%

60%

80%

100%

120%

Chatswood Zetland Rhodes Parramatta Chippendale

2016 Apartment (%)

2011 Apartment (%)

APARTMENTS AREN’T JUST FOR SINGLES AND COUPLES >25% OF APARTMENTS IN SYDNEY ARE OCCUPIED BY FAMILIES WITH CHILDREN

553,441 APARTMENTS IN 2016

HOUSEHOLD COMPOSITION IN APARTMENTS VARIES WIDELY BY LOCATION

0%

5%

10%

15%

20%

25%

30%

35%

40%

Chatswood Zetland Rhodes Parramatta Chippendale

Lone person household

Couples

Families with children

Group household

15%

20%

63%

2%

Apartment

Owned

Mortgage

Rented

Other

36%

40%

23%

2%

Detached

Owned

Mortgage

Rented

Other

DOMINANCE OF RENTERS LIVING IN APARTMENTS

WHAT ABOUT IN APARTMENT HOTSPOTS?

61%65%

61%

75% 75%

17%

24%28%

16% 13%

18%

8% 9% 8%10%

3% 3% 2% 1% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Chatswood Zetland Rhodes Parramatta Chippendale

Other (%)

Owned (%)

Mortgage (%)

Rented (%)

HOUSEHOLD INCOMES ACROSS SYDNEY ARE LOWER FOR APARTMENT DWELLERS

70%

53%

30%

47%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Apartment (%)

Detached (%)

Below Median

Above Median

BUT INCOMES IN HOTSPOTS MORE ALIGNNED WITH THE SYDNEY AVERAGE

55%49%

53%59%

63%

45%51%

47%41%

37%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Chatswood Zetland Rhodes Parramatta Chippendale

Below Median Above Median

HIGHEST SHARE OF APARTMENT DWELLERS IN HOTSPOTS ARE CHINESE-BORN

POTENTIAL APARTMENT SITES

Apartment Pipeline

Future Sites

AFFORDABILITY STORY

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

WAGES HAVE BEEN GROWING AT LESS THAN HALF OF APARTMENT PRICES

Median apartment

price growth

8.5% per annum

Wage growth

3.4% per annum

CUMULATIVE APARTMENT PRICE GROWTH OVER THE LAST 10 YEARS HAS FAROUTSTRIPPED WAGE GROWTH

100

110

120

130

140

150

160

170

180

190

200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Wage Growth Median Apartment Price Growth

SYDNEY IS THE 2ND

LEAST AFFORDABLE HOUSING MARKET IN THE WORLD

2005 2017

CITY

MEDIAN

MULTIPLE CITY

MEDIAN

MULTIPLE

1. LOS ANGELES, USA 11.2 1. HONG KONG 19.4

2. SAN DIEGO, USA 10.8 2. SYDNEY, AUSTRALIA 12.9

3. HONOLULU, USA 10.6 3. VANCOUVER, CANADA 12.6

4. VENTURA COUNTY, USA 9.6 4. SANTA CRUZ, USA 10.4

5. SAN FRANCISCO, USA 9.3 5. SAN JOSE, USA 10.3

6. MIAMI, USA 8.8 6. MELBOURNE, AUSTRALIA 9.9

7. SYDNEY, AUSTRALIA 8.5 7. SANTA BARBARA, USA 9.4

8. NEW YORK, USA 7.9 8. LOS ANGELES, USA 9.4

9. RIVERSIDE, USA 7.7 9. HONOLULU, USA 9.2

10. SAN JOSE, USA 7.4 10. SAN FRANCISCO, USA 9.1

WHAT ABOUT THE OTHER AUSTRALIAN CITIES?

2005 2017

CITY

MEDIAN

MULTIPLE CITY

MEDIAN

MULTIPLE

7. SYDNEY 8.5 2. SYDNEY 12.9

15. HOBART 6.6 6. MELBOURNE 9.9

18. ADELAIDE 6.5 34. ADELAIDE 6.6

19. MELBOURNE 6.4 38. BRISBANE 6.3

23. PERTH 6.1 39. HOBART 6.2

26. BRISBANE 6.0 48. PERTH 5.9

45. CANBERRA 4.8 51. CANBERRA 5.8

51. DARWIN 4.3 127. DARWIN 4.3

BUILD TO RENT IS COMING TO AUSTRALIA

▪ Rental yields to increase

▪ Attractive and stable risk adjusted returns RETURNS WILL BRING IN INVESTORS

▪ Speedier to develop

- No pre-sales hurdles

▪ Opportunity to leverage airspace and maintain control

- Shopping centres

- Clubs

- Train stations

NEED FOR CONTROL WILL ENTICE DEVELOPERS

▪ More balanced tenant-landlord power base

▪ Security of tenure

▪ Flexibility

▪ Responsive customer service

▪ Services and amenity options

FOR RESIDENTS IT’S ABOUT CHOICE

RENTERS ARE GROWING TO BE A FORCE TO RECKON WITH

2006 = 32%

458,740 dwellings

2011 = 32%

491,740 dwellings

2016 = 36%

574,130 dwellings

URBIS.COM.AU

WE’RE NOT OUT OF THE WOODS YET -CHALLENGES

▪ Site availability

▪ Lack of experience and credibility in operations

▪ New asset class considered a novelty by investors

CONCLUSIONS

URBIS.COM.AU

POINTS TO PONDER

1. Two-thirds of apartment dwellers are renters

2. Many families with children live in apartments >140,000

3. Future apartment locations

- Parramatta

- New train stations

- Above shopping centres and clubs

4. Affordability worsening – should we worry?

5. Build to rent is coming to a site near you!

THANK YOUPRINCESS VENTURAPVENTURA@URBIS.COM.AU