Why commercial property industry is booming in Sydney

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Why commercial property industry is booming in Sydney
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Introduction

Are you looking for expansion in your portfolio of investing in commercial property, but not very sure of where exactly to invest? Well, Business Parks in Sydney are an option worth pondering over as currently they are undergoing massive expansion across the country. Sydney’s Business Park and Norwest Business Park, both these places, offer exciting opportunities of investment in the commercial property segment.

 

Background

The property boom in Australia is primarily concentrated in cities like Sydney, Melbourne, and Perth.

 

An improvement in the economic condition and flexible lending policies gave way to improved credit and property cost cycle in the early 1990s. The relaxed credit standards gave business a much-required boost. Companies were dependent on the property as collateral. As commercial property market witnessed a boom, companies saw a rise in their gearings. Between 1986 and 1989, prices of Sydney property market doubled. The stock market crash in 1987 didn’t affect the commercial property market as much as the increase in the interest rates. Banks were the worst affected and had to issue equity to bear the losses. This slump in the economy resulted in depression up till the 1990s.

 

It’s important to understand the reason and trend of the commercial property boom and for that one much study the various factors contributing to this trend.

 

The main factor that drives commercial property growth is demand. Even though residential property and commercial property demand are same, however, commercial property demand is dependent on other factors like growth in population and economic factors. As there is a witness in economic growth, demand for transport cost of various materials increase, and this is the first sign of growth. Earnings of Transport companies start to increase and there are more jobs available in the market. All this leads to increasing in demand of office spaces. Then follows the warehouse space, retail space, etc.

 

Interest Rates also play a role in the increase in demand of commercial property. When growth has to be slowed down, Reserve Bank of Australia increases the interest rates which makes the cost of money grow higher and the company’s growth rate slows down. It pulls down the demand for both residential and commercial property.

 

Infrastructure Development is the third factor causing the commercial property demand to go up. Since the M7 road has got opened in the outskirts of Sydney, it has increased the warehouse demand. Transport companies prefer to have their warehouses facility when land is cheap, and road service is good.

 

Demographics are the fourth factor for commercial development boom as different people move into different places as growth goes up. Now people prefer to work near home, and so they look for residential property around their workplace.

 

Population growth is the fifth factor for commercial development. As population growth goes up of a particular locality, facilities like retail, malls, café, clubs, hospitals also rise.

The Commercial Property is one of the wanted sectors into which funds would be invested, and this became all the more with the reduction in capital gain tax. The emergence of Sydney as a financial center in the Asia Pacific region, the demand for commercial and office location rose. It was particularly attractive to institutional investors and slowly the city’s skyline got changed with the emergence of iconic towers like MLC Tower at Martin Place, Australia Square and AMP Tower on the quay. The economic and political scenario created space in strategic areas of urban and metro planning and its linked social results. There was more space for liberalization favoring supply-side. The vision today has changed from an equitable city to a productive city. It has increased the concern for managing urban development costs, emphasis on entrepreneurial needs and lastly push to create a flexible form of planning control methods.

 

Sydney has benefitted a lot from globalization thus attracting companies adopting this city as its regional or national headquarters. Sector namely finance, property, education, information, services have seen expansion on a big level. Employment opportunities have boomed and development in commercial, office space, hotel, etc. seems to be unaffected despite slump or boom period in the economy. The hallmark period of the year 2000 marked the event of Olympic Games when the city witnessed an expansion in the tourism circuit, hotel industry, and retail operations. Shopping festivals added to the charm. Heritage building “Queen Victoria” was redeveloped by MNC giant “Ipoh”. Demands are being generated for new office spaces, and there are more developers who are willing to invest in this important and developed market.

 

Since the establishment of Central Sydney Planning Committee (CSPC), some of the major city planning-related decisions were taken. Plans were being made around having an urban life that was more tightly framed, and development standards were not vague but more flexible.

 

Business Park at Marsden Park is a new development that offers great design, awesome amenities with environmental hazards kept in mind. It offers a variety of options to investors like large retail spaces, office formats and space for industrial expansion since they come in a variety of sizes ranging from 200 square meters upto 20 hectares. The flexibility that it offers gives a confidence to investors to establish their entire set-up i.e. manufacturing, supply-chain, and retail at a single location. The government has recently given its nod for the commencement of work on the North West Rail link. With some of the big MNC giants announcing to open their office near Marsden Park like Shell, Bunnings Warehouse and McDonalds, this place sure looks to be the hot-spot in investors mind.

 

The Norwest Business Park is located in the Sydney Hills District and is in an expansion phase. With the kind of expansion, employment opportunities figures have reached to 35,000 from 20,000. This place has become well established with Lakes, Private Hospitals, Shopping Malls, Post Office, Banks, Cafes, Restaurants and other recreational centers. There are many projects being undertaken in order to further develop this place namely The North West Rail Link, M2 Motorway and around Business Park.

Overall it gives a great picture for investment in Sydney.

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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