High-net-worth individuals continue to buy up big on off-the-plan luxury residences on Sydney’s foreshore and with a record breaking Sydney penthouse selling for $26m in Sydney's Opera Residences we’re wondering – when is it going to end?
$50,000 per square metre
Buyers paid about $1.1 million off-the-plan for the 58-square-metre Barangaroo apartments in 2013 that’s approx. $19,000 per square metre. Fast forward to 2016 and a similar sized apartment in the Opera Residences will cost you approx. $50,000 per square metre.
Interestingly, back in 2013, overseas buyers were driving up the pricing and competition for off-the-plan purchases at Barangaroo. In 2016, we’ve seen a dramatic reduction of overseas buyers due to the APRA investment lending changes, yet prices are at ridiculous levels.
Rate per square meter
Buy and sell – a risky but rewarding strategy
Since 2013, property prices have continued to rise and about 50 owners at Sydney's Barangaroo have made roughly $1 million each from the resale of their off-the-plan apartments, making an almost 50 per cent profit in just over two years.
Many owners, mostly investors, sold their $2 million two-bedroom apartments in Anadara and Alexander residences in Barangaroo South in December 2015 for $3 million each.
Riding the property valuation wave is a risky but rewarding strategy. These buyers probably had no intention of even living or renting out the properties when they purchased them off the plan. Instead buying early, waiting for the value to increase before completion, then sell at a profit to buyers who missed out on the off-the-plan purchase.
Will valuations increase between 2016 and 2019
With the completion date of the Opera Residence development due in 2019, it will be interesting to see if property valuations will increase or decrease. For those who rode the property boom wave of 2015/2016 their purchases have resulted in growth. However with a potentially uncertain property climate, is now the right time to buy big?
Australian apartment record
The four-bedroom home atop the planned 20-storey Opera Residences has been bought by an undisclosed buyer, together with the two three-bedroom apartments for $31 million in a total package worth $57 million.
The buyer – a local woman – is said to have purchased the two other apartments for her children. What a lovely mum she is!
One-bedroom apartments sold for between $1.8 and $2.9 million, two-bedroom $4-5.9 million and three-bedroom for $6.5-16 million. Construction of Opera Residences will start in April and completion is due in December 2019.
The penthouse has just been snapped up off the plan for $26 million, toppling the Australian apartment record. Has the world gone mad? No, just Sydney apartment buyers.
Finance for Sydney inner city suburbs
Award winning Sydney mortgage broker, Mint Equity, is seeing lending tighten significantly particularly on inner Sydney suburbs due to an oversupply. However, the good news is it’s mainly the big banks changing their credit policy and the 2nd tier lenders are still in the home loan game for both owner occupiers and property investors. Learn more about recent changes to Sydney postcode lending and High Risk Suburbs Borrowers Should Avoid.