How commercial property market is developing in New Castle in the past 5 years

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How commercial property market is developing in New Castle in the past 5 years
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Newcastle located in the heart of Hunter Region and surrounded by pristine beaches has been a preferred place to settle for many. It provides cafes, restaurants, lively night life; a bouquet of recreational activities, world class health care and animated city landscapes hence passes on the benefits of a large and comfortable city. It is also Australia’s key business destination apart from being the seventh largest city of the continent. It is a two-hour drive away from Sydney and is housing around 1,57,000 residents.

 

In December 2012, the Property Council of Australia led to the formation of the Newcastle Renewal Taskforce. It was a local industrial body formulated to advice government on the activities to revive the commercial market of the city. This happened after there was a slump experienced in mid of the year 2010 and during 2012 when there was a change in the market trends.

 

Newcastle is a diverse and an ever-evolving city and firms around the city are looking for an image makeover by providing a work environment conducive to employee’s expectation. There are signs of improvement in the commercial market segment of the city and the manufacturing sector is prone to be highly technological and resilient owing to this improvement.

 

Australia’s political system has seen the birth and growth of a range of state and local government based property taxes like; reducing stamp duty on commercial property transfers etc. These have led to a boost in the retirement savings of the nine million ordinary Australians who own commercial property through superannuation funds, property trusts or life insurance policies.

 

However, currently there is a gap in demand and supply in the commercial market. Investors who own such property are reluctant to sell off their dwelling due to lower returns whereas, on the other hand, the buyers are increasing day by day owing to higher margins between returns and bank loans. It is interesting to note that there is a steady supply of tenants for smaller spaces. The interest rates have definitely been low and economy on the rise, however, matters pertaining to demand and supply need to be addressed on priority.

 

The latest data showsthat the total sales in Newcastle were $142 million for the year, a decrease from the $151.3 million recorded the same time last year. The industrial vacancy and unemployment rate is increasing in the city, however at the same time the residential house prices are also increasing. The commercial property market is witnessing a downturn as rents are sliding backward to levels where they were 5 years ago. The city appears to be on a cusp of recovery. The market is heading towards consolidation between two prominent sectors emerging namely, mining sector (reflecting higher premiums) and the non-mining sector. The non-mining sector is expected to show some capital growth in the coming years. A limited builder activity is although foreseen. Low interest-rates and city’s revitalization are the major reasons leading to higher rates in Newcastle region.

 

While investing, preference is still given to sites located near major transport infrastructure as compared to those nearby Newcastle’s metropolitan base. There have been major developments in the infrastructure of the city since 2014, like opening up the harbor foreshore to Hunter Street, student accommodation developments, Newcastle University Campus etc. proving 2014 to be the year of turning point. The city has excellent public transport, wide roads and two train lines connecting the region with a large number of stations, thereby it has an infrastructure that boosts development and growth of property market. Newcastle houses two major hospitals, namely, John Hunter and the Royal Newcastle Centre, apart from the University of Newcastle (boasting over 30,000 students) and numerous shopping centers adding as an attraction for investors. Suburbs like Fletcher and Cameron Park are relatively newly developed suburbs and are currently investor’s hotspots. These are geographically well placed as the beaches are close-by and the mining industry too is nearby. Smart developmental planning, massive infrastructure spending, and a strong business sector have contributed to the changing face of Newcastle. It is significant to note that the airport and sea port are in a development phase and once completed, these projects will lead to a further rise in the industrial and commercial property demand.

Further, lack of opportunities in big cities like Sydney, Newcastle attracted more investors. Also, residents of Sydney are looking for retirement homes in nearby places, with Newcastle being the most popular. The city is earmarked for exponential growth in the coming next 10 years. Relevant steps are being undertaken by the Newcastle Urban Renewal and Transport Program to help boost the economic activity including investment in retail, office and residential dwellings. The market is expected to grow at a 15% rate outstripping Sydney. However, at the same time growth in Sydney market is expected to come down from a 17% to 9% in coming three years. The median house prices in Newcastle will increase from 7% in 2015 to 8% in 2016. This will help people migrate from Sydney to Newcastle and further lead to the development of the city. Development of the city will make it more commercially viable and finally add to the booming commercial sector. Newcastle is thus acting as a sponge of the partial overflow from Sydney’s market.

 

Sydney as a market is at a receding stage owing to restricted supply and high construction cost, affecting the commencement of new construction works. This drop has been witnessed after three years and is no cause of concern. In fact, this slowdown will help the city settle down. Investors in Newcastle are ready to take the risk as the financial results are certain and are supported by the affordability becoming challenging in Sydney.

 

To summarize, major reasons to invest in Newcastle are as follows:

  • Newcastle has a growing population.
  • The housing market is tight.
  • The city has a good mix of businesses, employing thousands of individuals.
  • High levels of investment by government and businesses in the infrastructure development of the city.
  • Newcastle Port, the oldest port in Australia, has tons of materials moved through.
     

Newcastle promises a strong capital growth making investment secure.

Author Info Manish Khanna

Manish is founder of Business2sell Group of Websites. 

Business2Sell.com.au is one of the leading business and franchise for sale listing websites. We work with our business brokers, commercial agents, franchisors and private sellers to help them connect with the right buyers for their opportunities. 

With website now functional in Australia, United States, United Kingdom, Canada, New Zealand and South Africa. We have over 18,000 businesses for sale listed, with over 220 Business Broker and Commercial Agent. 

I have over 20 years of experience in Web Industry; I have been involved in websites industry since the early years of 1996-97. In my professional career I may have worked for over 10,000+ websites. My Specialty is to build portals or complex online applications.

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