NEWS

Newcastle ripe for Sydney Investors

Newcastle is a city experiencing a time of momentous redevelopment and growth and is considered the heartbeat of the Hunter. As Australia’s seventh largest city, Newcastle boasts an enviable lifestyle renowned for its stunning beaches, rich maritime history, vibrant arts culture, eclectic bars and acclaimed restaurants.

This positive growth has shifted the city from its prior disposition as an industrial hub to one of the Top 10 cities in the world, according to Lonely Planet in 2011 and is ranked the sixth most visited place in Australia, attracting more than 9.6 million visitors per year, advantageously being located with access to sensational beaches; world-class wineries in the Hunter Valley; a world-heritage listed rainforest, Barrington Tops; and Australia’s largest salt water lake, Lake Macquarie.

Of late, Newcastle has been the beneficiary of a surge in investment activity, largely stimulated by an unprecedented $6.55 billion State Government investment mandate which has seen the truncation of the heavy rail through the CBD, to be replaced by a new light rail system on Hunter Street, the new transport interchange at Wickham, construction of the Newcastle City University Campus and many more.

Another factor intensifying investment in the CBD, is its affordability relative to other major cities around Australia while remaining proximate to Sydney.

Colliers International’s Director Residential Project Marketing, Dane Crawford reports that sales to Sydney metropolitan based investors have swelled to 20% of total market transactions, up from 5% in 2011.

As Sydney-siders continue their pursuit for stronger yields outside of the Sydney metro area, this has resulted in significant compression of yields in Newcastle. Symptomatically, price growth has now outstripped Sydney’s annual house price growth of 10.2% by 1.3%, currently sitting at 11.5%.

“Newcastle represents tremendous value in comparison to Sydney and it’s hard to argue the excellent lifestyle that comes with it.”

A state-of-the-art opportunity to invigorate Newcastle’s historic East End has risen as the largest master planned mixed use site in the city recently sold to IRIS Capital on behalf of UrbanGrowth and GPT. Determined after thorough community consultation the concept represents a balance between Council requirements and community desire in order to boost job creation, community spirit and economic activity. The sale of these four city blocks will deliver a significant boost of private investment over a number of years providing 565 apartments by building on the existing dynamics of the inner-city village atmosphere. The communal multiuse design ensures the precinct maintains its existing city charm while protecting significant view lines.The East End concept, abundance of apartments, small boutique shops and cafes at ground level subsequently activating amenities and creating a world class urban village.

Why Newcastle

Located on the eastern coastline of Australia, Newcastle presents a combination of city, metropolitan and regional living opportunities featuring golden beaches, world famous surfing, major shopping centres, boutique markets and world-class golf courses.

Newcastle has an abundance of walking tracks available including coastal walks such as Bathers Way, ANZAC Memorial Walk, nature reserves and National Parks. Stockton Sand Dunes are the largest moving dunes in the southern hemisphere. Activities include camel riding and four wheel driving. Waterways including Newcastle Harbour and Lake Macquarie, the largest salt water lake in the southern hemisphere. Hunter Valley Wine Country, one of the oldest and one of the most well - known wine regions in Australia is located one hour north west from the Newcastle CBD.

“Inspired by lifestyle and driven by opportunity, Newcastle is now entering a rising market. Acquiring the 2017 V8 Supercars has raised the domestic and international profile of Newcastle and has been the city’s biggest opportunity to invest in world-class infrastructure and drive an increase in visitation” said Mr Crawford.

The Property Council states that the NSW Government's Urban Renewal Strategy for Newcastle has raised confidence within the property market resulting in an influx of investors. Cutting-edge developers are highly aware of Newcastle’s capability. This recognition has led to capitalisation upon.

“Newcastle is a city coming of age. Newcastle offers a variety of accommodation options for both investment and permanent stays. Newcastle’s identity is being significantly transformed. This identity transformation draws significantly upon the emergence of more cosmopolitan landscapes within inner Newcastle associated with the gentrification of these areas. Vibrant environments that support security, safety, identity, historic continuity and cultural diversity, and allows for the efficient and timely provision of necessary infrastructure” said Mr Crawford.

In 2014, the Property Council’s Hunter director Andrew Fletcher said “We know that Novocastrians are saying that they’d like to see really good quality high density apartments in the city.”

The city centre is developing its own character and identity that reflects the needs and aspirations not only for Novocastrians but for Sydney investors too. The architectural rescue of heritage buildings such as the Herald Building in the East End preserves Newcastle’s industrial heritage, simultaneously entrapping the city’s need for innovative architectural design. 

These government decisions mean the private sector is able to take some risk and invest. Contained within a high quality urban environment, designed for future improvement, Newcastle is built upon vibrant and emerging businesses that thrive on innovation and creativity to generate a new sustainable community. Newcastle has a creative culture that is being translated into business opportunities. Newcastle offers high residential amenity with its coastal location and cultural, sporting and leisure facilities and is an attractive place to live and invest.

Mr Crawford said developers are awakening to the prospect of affordable stock by envisioning happy lifestyles as greater interest propels Newcastle into the market as economic conditions continue to improve.

“The Council says the State Government's Urban Renewal Strategy has sparked high levels of investment interest in the CBD, both in commercial and residential property.

Market participation has exponential growth as developers recover from the GFC’s impact by adopting an optimistic approach to Newcastle’s future.

“Investors are attracted to the convenience of inner city residency and the lifestyle opportunities it affords them in a commodified bundle. The upward shift in price points over the last five years has placed Newcastle directly on investors map as a viable alternative to Sydney life. Despite the mining subsidence the city of Newcastle remains beneficiary of noteworthy capital projects investment”.

Mr Crawford went on to say that Newcastle offers authentic employment and lifestyle opportunities for Sydney-siders that are priced out of the market and as a result are rapidly penetrating the property market.

The City of Newcastle projects that in 2036, Newcastle’s population is forecast to be approximately 207,450. An increase of 42,400 persons (33.4%) from 2016. This represents an average annual growth rate of 0.62%.

“The momentum continues to build as the inner city has seen dramatic change over the 12 months, investor and business owner confidence is reassured…the wait is over, we anticipate no longer, the change is here. Plans for future connectivity to the harbour when the rail corridor is opened up with the proposed light rail taking its place” said Mr Crawford.

Research commissioned by the Newcastle Renewal Taskforce indicates the light rail and urban renewal will surge a $2.5 billion boost to the local economy.

At the height of NSW’s property boom Colliers International in Newcastle is experiencing steady demand for affordable off-the-plan apartments as sales rates are healthier than ever before.

Housing tenure is Newcastle is currently 53%, which is higher than the National average and education rates are at a soaring 12.2% in comparison to the current national average of 4.4%. Increased amounts of people working in the private sector means amplified disposable income thus Newcastle’s economy has long-term capability to thrive.

Affordability Index

First-time home buyers are feeling the squeeze of higher interest rates with mortgage affordability at its worst level for 16 years.

Residents of cities with extremely high average home prices said to be priced out of the market if they could not afford even an entry-level home. The options available to someone who is priced out of a real estate market would include buying in a different area, waiting for the supply of housing to increase enough to lower housing prices

A measure of a population's ability to afford to purchase a particular item, such as a house, indexed to the population's income. An affordability index uses the value of 100 to represent the position of someone earning a population's median income, with values above 100 indicating that an item is less likely to be affordable and values below 100 indicating that an item is more affordable.

AERO APARTMENTS

http://www.colliers.com.au/24105/

Colliers International Newcastle is embracing the pace by delivering fresh, architecturally designed sophisticated luxury to the residential development market.  Investors and owner-occupiers will enjoy beautifully appointed spacious and stylish 1, 2 & 3 bedroom apartments. For this reason investors are beginning to discover the exclusivity not often attributed to apartment living. Apartment living offers residents’ high rise extensive views with sunrises and sunsets of Newcastle’s famous natural features. This is the pinnacle of inner city entertaining. Whether it’s first homebuyers, downsizers or astute investors, Colliers invites all buyer categories to innovative investment options by joining forces to enjoy this unparalleled inner city lifestyle. Colliers presents developments including Aero, the Herald with Uncompromising standards.

The West End is enjoying a new lease on life with the Newcastle Urban Renewal Strategy and construction of the Newcastle University City Campus. These changes have unlocked the city centre as a diverse, vibrant and attractive place favouring the savvy and selective types.

Spoilt for choice at the upcoming Wickham Transport Interchange with regional trains, future light rail, regional buses, taxis and cars all with an easy 200m walking distance. Better yet, Hunter Street is abound with bus routes to take you to any part of the city. Buzzing with choice Newcastle’s food and beverage scene is on par with the country’s biggest cities.  An ever-growing list of quality bars, cafés and restaurants are all contributing to this culinary explosion.

HERALD APARTMENTS

http://www.colliers.com.au/27173/

An Architectural triumph in the prized eastern heart of Newcastle’s CBD, this remarkable building combines vibrant city life, spectacular outlooks and uplifting green landscapes with beautifully finished living spaces. It is a masterpiece of design.

This magnificent residential building captures the spirit of Newcastle – its harbour, its heritage, and its future – the things that make this city so special, so unique. The renewal here in the CBD’s east, the eclectic architecture, the coast, and Newcastle’s industrial past; all these elements form the inspiration for its powerhouse architecture. Once home to the Fairfax Herald newspaper group, it tells an expressive story of its prime central site. “Historically, this was always the grand end of town,” said Mr Crawford. “It’s a reflection of the more discerning nature of Newcastle buyers and owner-occupiers who are seeking greater amenity and features from apartment living.”

Newcastle statistics

Low Unemployment rate - below national average (as at Mar 2016)

The Hunter will benefit from jobs growth with the projected amount of jobs in the Hunter Region growing by 8.1% or 24,500 jobs by 2020. The biggest sources of new employment being Health Care, Business Services, Education and Hospitality which have been reviewed below.

Health Care

Health care is currently the largest employment sector in the Hunter, and the fastest growing. By 2020, the sector is projected to account for one in six Hunter jobs which is above the State average.

Growth is underpinned by its focus on health research through the oldest Medical School outside metropolitan areas, two large teaching hospital and the Hunter Medical Research Institute.

Education & Training

Education is the Hunter Region’s seventh largest employment sector, and is the second-fastest projected growth to 2020. Hunter jobs growth is projected to outpace the rest of the State and Nation. This will be underpinned by increased numbers of school-aged children to 2020, as the mini baby boom of the early 2000’s goes through. Jobs are distributed throughout the Hunter Region.

Residential Property Drivers

33.4% increase in population predicted by 2036. 1.5% current interest rate // 1.25% predicted interest rate.

Population growth

High population growth is an economic driver for the residential market that is stimulating the Newcastle’s development boom.  The official population estimate for 2016 was 165,050 persons Newcastle’s population is projected to reach 207,450 in 2036. Positive correlation – inextricably linked.

Record low interest rates

Investors see opportunity in Newcastle’s current expansion in some cases due to Newcastle’s record low interest rates. Experts predict interest rates will remain stable within the foreseeable future, supporting demand for property. 5.8% unemployment rate.

Low Unemployment

The unemployment rate of the Hunter Region currently sits at 5.8% - which is lower than the national average unemployment rate. The Hunter will benefit from job growth in the Health Care, Business Services, Education and Hospitality sectors.

Economic Growth

Economic growth is predicted to accelerate in the immediate future. Due to demand for services and an increase in residential construction, the Newcastle region is expected to benefit substantially from an improvement in domestic visitation (owing to a lower Australian dollar).  Moreover, the New South Wales Government have committed $500 million to revitalise Newcastle.

Capital City Price Disparity

A major driver of the Newcastle property market is the disparity between property prices in Newcastle in comparison other major capital cities. Newcastle property prices are 48% of the value compared to Sydney metro.

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