Media release - 11th March, 2015
Generous yields of almost 9%, along with commercial real estate affordability and changing perceptions about the erstwhile steel city’s economic outlook, are combining to attract Sydney money to Wollongong.
“It’s almost impossible to find yields of 9% in Sydney thanks to a surge in the construction of new commercial assets in the capital,” said Josh Kersten, Co-Principal of Raine & Horne Commercial Wollongong.
“Low interest rates are also working in favour of local investors, with banks and fund managers struggling to compete with the yields generated by Wollongong’s commercial real estate market.”
The growing number of out-of-town investors also reflects the changing perceptions of Wollongong’s economic prospects, according to Mr Kersten.
“Sydney investors are recognising that Wollongong is transitioning from a steel-dependent city to an important knowledge services centre, international trade hub and a leading university city,” said Mr Kersten.
“The Illawarra is the third largest regional economy in New South Wales, worth in excess of $16 billion in goods and services, and with its close proximity to major Australian cities such as Sydney and Canberra, it is an ideal place to live, work and do business.”
The Wollongong commercial property market’s affordability is also proving a big tick with investors, owner-occupiers and developers, according to Mr Kersten.
For example, Raine & Horne Commercial Wollongong recently secured an off-market sale of a corner building, located at 106 Market Street, Wollongong, for $1.63 million. The building is located close to the centre of town and includes 16 car spaces.
“The vendor, a local architect/builder, has moved to new premises and has decided the asset was surplus to requirements,” said Mr Kersten.
“It’s been purchased by an investor, who intends to add value by converting it to a strata title, which will enable it to be leased to other local businesses. Given the property’s prime location, net yields of 9% are well within reach for this asset.”
Raine & Horne Commercial Wollongong also sold a duo of retail assets on the ground floor of a modern luxury apartment block at 11–15 Atchison Street, Wollongong to a Sydney investor for $1.55 million, who paid cash for the properties.
“Moreover, the investor has already locked in a net yield of 8.8% and a duo of successful local businesses as tenants,” said Mr Kersten. Weight loss firm Jenny Craig and Ian Cassidy Osteopathy recently signed brand new five-year leases with five-year options.
The news is also robust on the residential development front, with around 50% of the 23 apartments in the Oracle building located at 27-29 Harbour Street, Wollongong under contract. The property sold to a local Wollongong developer for $3.2 million and settled in February.
“Oracle will be a an eight floor luxury apartment block with sweeping views of Harbour Beach, and construction will start in May,” said Mr Kersten, who expects the project will be completed by late 2016.
“Two bedroom apartments start from $800,000, while the 3-bedders will market from $1.2 million, and already we’re seeing interest from local buyers and Sydney investors.”
For further media information contact:
Josh Kersten, Co-principal, Raine & Horne Commercial Wollongong on 0419 991 500
Andrew Harrington, National Communications Manager, Raine & Horne on 02 9258 5400