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Sydney building boom reaches $62b with little slowdown in sight; This has made the City attractive to investors.
Topic Started: 27 Sep 2017, 07:43 AM (612 Views)
Bardon
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Sydney building boom reaches $62b with little slowdown in sight


There is a $62 billion building boom across Sydney's city, from infrastructure projects to commercial, residential and developments sites, which has underpinned the latest wave of demand for physical assets.

The majority of the spending, about $50 billion, is in transport infrastructure developments in and around the central business district. This has made the City attractive to investors.


Sticks and Wombat apply a feminine touch to their winning laundry, WC and hallway.
It is widely tipped Lendlease will look to expand its presence in the City with the acquisition of 10 Spring Street, worth about $220 million, being sold by Centuria. Lendlease owns 8 Spring Street and its APPF trust and Abu Dhabi Investment Authority, the nearby 1 O'Connell Street. A purchase would allow Lendlease to consolidate that block for a larger development over time.

Another deal in the wings is the sale by AMP Capital of a third interest in its 50 Bridge Street property, which is a key part of the group's $2 billion Quay Quarter Sydney development at Circular Quay. AMP Capital has appointed JLL and Macquarie Bank to advise on the sale.

AMP Capital declined to comment when contacted yesterday.

It is expected the 50 Bridge Street asset will attract capital from both domestic and international investors.

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Blackstone has also engaged James Quigley and Paul Fernandes of Cushman & Wakefield, and Michael Andrews and James Parry of CBRE to sell the 1 Castlereagh Street tower in Sydney, worth about $200 million.

According to John Sears, the national director, research at Cushman & Wakefield, these developments will help drive economic growth by making it faster and easier to move around the CBD, promote Sydney as a destination and create the space to absorb future business growth.

"Sydney's development boom is set to drive economic development," Mr Sears says in his latest report.

"Infrastructure, office, hotel and residential projects will make transport easier as well as support population, employment, retail and tourism growth. This should provide the underlying structure to support ongoing growth in tenant demand for office space in the CBD over the coming decades.'

Further underpinning the demand to be in the City is the City of Sydney's draft Central Sydney Planning Strategy (CSPS). The CSPS, released in 2016, aims to reduce the proportion of residential development and nearly triple the amount of commercial floor space that can be added before capacity in the Sydney CBD is reached.

Mr Sears said the proposed planning strategy should allow for consolidation of sites and continued growth of the CBD office market.

Aside from office, the residential market at the eastern end of Hyde Park is seen as the new hot spot for investors, while the western corridor and Darling Harbour is home to about $2 billion worth of new hotel projects.

The NSW government's planned $200 million upgrade at Circular Quay will complement the AMP Capital, Lendlease, Mirvac and Wanda projects at the northern end of the CBD.

http://www.smh.com.au/business/property/sydney-building-boom-reaches-62b-with-little-slowdown-in-sight-20170926-gyotee.html
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Ex BP Golly
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Does anyone for a moment think the $50bn transport infrastructure spend will result in anything other than an unlikely temporary improvement in commute times?

Anyone?

Trolley?
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Bardon
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I have been working in Sydney including its transport for over 2o years, we are now working on North and West Connex and many other smaller infrastructure projects. Sydney has always been a basket case for getting around, its only getting worse and the new infrastructure will not improve any of it.

The only way to get ahead with this kind of stuff is to be the contractor or be an adjacent landowner. We all pay for it through income tax and other taxes but only the landowners get the payback as the capital injection of the project budgets flows through to increased land prices.

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zaph
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Ex BP Golly
27 Sep 2017, 09:40 AM
Does anyone for a moment think the $50bn transport infrastructure spend will result in anything other than an unlikely temporary improvement in commute times?

Anyone?

Trolley?
I'd imagine it's just 'maintenance' spending. The system will not improve, just cope.

Like the cross-river rail in Brisbane. A $5.5b (that will likely end up more like 8b) project that is just making the trains run at their slow normal pace. The more direct route will save a few minutes. The rail infrastructure in Brisbane gives Bombay a run for its money. There's a stretch on my route that has the high-speed limit of 80k. Once the train get's to about 70k it's shaking like Blondie at 7am on a Sunday morning.
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channaylor
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Investors have spent $29 billion into commercial property particularly in retail, office, industrial and hotel assets in 2016, with almost one third of the money coming from overseas sovereign wealth funds and rich individuals. About $8.19 billion of these sales were attributed to foreign investors. The update comes as the property investment trust sector starts the report for year 2017.

The retail landlords are expected to be more subdued because of tenants being pressured of flat sales but the office and industrial-focused REITs are expected to produce solid results because of low vacancy rates.

Meanwhile, the hotel sector is emerging to be more active with plenty of developments and listings hitting the market. Investors are said to favour bricks and mortar assets because these provide stronger yields and sharper compression than parking their money in a bank account.

Reports show that offshore capital continues to enter the Australian commercial market, targeting office assets in the CBD along the eastern seaboard.

Yield compression will continue until the end of the 2017 financial year with limited stock creating tight competition between investors. NSW and Victoria reportedly experience rising demand for investment assets on infrastructure development, rising rental rates, tightening yields and population growth.

According to reports, the strong demand and infrastructure investment had opened up opportunities for developers to build the next generation of commercial property assets.

These will boost the cities' reputations as globally competitive. Australia's population growth was also an important component. Office leasing has improved in activity by 18% with a 10% fall in A- and B-grade incentives, from 33 to 23% in A-grade stock and from 31 to 21% in the B-grade sector. One of the busiest sectors has also been in hotels and a high level of interest is expected from domestic and international buyers.
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Tick Tock
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Geesus Christ how many people are they going to squeeze into Sydney.

Its already maxed out is'nt it! :D
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zaph
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Tick Tock
27 Sep 2017, 12:46 PM
Geesus Christ how many people are they going to squeeze into Sydney.

Its already maxed out is'nt it! :D
Another 4256536
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Tick Tock
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And i'd add a few zero's's on the end of that too.

You know like all the zero's they've added onto the U.S debt clock! :wak:

Edit actually.....Ther past the zero's now and well into the 20 'TRILLION' and onwards mark!!!

http://www.usdebtclock.org/
Edited by Tick Tock, 27 Sep 2017, 07:55 PM.
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Rufus
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Tick Tock
27 Sep 2017, 12:46 PM
Geesus Christ how many people are they going to squeeze into Sydney.

Its already maxed out is'nt it! :D
http://www.afr.com/news/economy/biggest-population-surge-since-2008-20170927-gypt76
Take risks - if you win you will become wealthy, if you lose you will become wise
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Bardon
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Taken for a ride, this is how it works.


Quote:
 

Apart from travellerswho use transport, international studies over many years have shown that
there is an additional beneficiary who plays no direct part in transport provision, who makes no
contribution to the funding but who takes an unequal large share in the financial benefits arising
from the building and operation of good transport links.

Don Riley, a London property developer has written a book “Taken for a Ride” in which he explores
the impact of the building of the Jubilee Line Extension (JLE) Underground line in London.
Don Riley visited the tunnelling site in the mid-1990s and has since commented how these men
digging the tunnel were sweating hard, risking their lives, not knowing where their next job was
coming from, while at the same time he, himself, was making money while he slept as his local land
holdings appreciated in value as the line became a reality.

This understanding of the land market inspired Don Riley to calculate the total land value increase
that arose within a radius of only 1,000 yards of each of the new JLE stations. His startling
conclusion is that these land values alone, have increased by a staggering £13billion when the
construction cost of the line itself was only £3.5billion. Don Riley suggests that some of this wealth
should have been collected by the Government in order to fund the project. An independent study
carried out for Transport for London, has also estimated that between 1992 and 2002 the JLE
caused land values to rise by £2.8bn close to just 2 of the 11 new stations (Southwark and Canary
Wharf). This means that the UK Government could have built the JLE at no cost to the public purse
if they had just chosen to collect less than one third of the increased land values arising from the
scheme!

Instead, with the exception of two modest contributions, the JLE was paid for from normal taxation.
It is no fault of the transport industry that Governments choose to ignore windfall gains that transport
creates. However, the findings of Don Riley and others in North America does mean that no longer
should transport planners go cap in hand to Governments for subsidies if they wish to fund new
projects or renew existing lines. As long as people are flocking to use the trains, then we now know
that as well as fares revenue the railway will generate its own finance in the form of increased land
values.

If Governments continue to only tax wages, trade or goods and services to create new transport
opportunities then they are choosing to give an unearned bonus to the owners of land.


http://abstracts.aetransport.org/paper/download/id/2646

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