Looming land shortage near Badgerys Creek Airport driving prices skyward
A land shortage is set to hit the western Sydney jobs hub near the future Badgerys Creek airport, with demand expected to become greater than supply within five years, a new report shows.
Of the 675 hectares of undeveloped industrial-zoned land within the Western Sydney Employment Area, 300 hectares is privately owned with the landowners reluctant to sell, CBRE’s latest report Western Sydney Airport: propelling growth in the Parkland City finds.
This leaves approximately 375 hectares available to develop, with only 270 hectares of this suitable for development.
“What we are seeing is landowners wanting to bank land rather than develop,” Freddie Kareh, CBRE research analyst, says.
Source: CBRE
“Demand is strong because of the access to the M4 and M7 and we expect land prices and rents to continue to rise in the vicinity. What we think will happen in five years is that potential buyers will be priced out and will look for new locations around Western Sydney Airport, as well as need for re-zoning.”
The Western Sydney Employment Area encompasses approximately 2,665 hectares of land predominately located within Eastern Creek and Erskine Park. Of this, nearly 1,885 hectares is currently zoned for industrial use, with 65 per cent of this total, or 1,210 hectares, already built up.
“We expect that the infrastructure development will likely extend in a south-west direction from the existing Western Sydney Employment Area or from Commonwealth land at Badgerys Creek,” Mr Kareh says.
Since the airport announcement in 2014, the price of a 2-hectare block and 10-hectare block of unzoned rural land in the Western Sydney Priority Growth Area have grown by 32 per cent and 24 per cent per annum on average respectively, the CBRE report indicates.
By contrast, the median house price in greater Sydney has risen by an average of 14 per cent annually over the same period.
In the four years since precinct plans for Austral and Leppington have been finalised, prices for 2-hectare blocks that have been rezoned from rural to low-density residential use have nearly tripled, growing from $1.99 million in 2013 to $5.62 million in 2017.
“In comparison, prices for 2-hectare blocks that have been rezoned from rural to light industrial have grown to more than $4.5 million in the same period,” Mr Kareh says.
The report highlights the changing skyline of the greater Sydney region, which is expected to see more than half of the city’s population reside west of Parramatta and the emergence of three metropolises – the Western Parkland City, the Central River City and the Eastern Harbour City.
The population of greater Sydney is projected to hit 8 million in the next 40 years.
The listing of a 30-acre landholding in Luddenham – the first on-market opportunity of its kind in the area – is expected to set a new benchmark for industry and development interest in the vicinity.
The 812 Luddenham Road property is situated within direct proximity to the future M9 and M12 Orbital Interchange – providing an opportunity for industrial use in the heart of this future growth area.
Market sources estimate the property could find a price around $20 million.
CBRE’s Thomas Mosca said the property would ignite interest from international investors, syndicates, institutional developers and high-net-worth land-bank investors.
“With construction on the airport to commence in the second half of this year, the property is expected to generate strong interest from institutional groups,” Mr Mosca said.
“The property will form part of what is anticipated to be one of the largest industrial hubs in the southern hemisphere.”
The Western Sydney Airport will be the economic catalyst to transform the Western Parkland City over the next 40 years. It will have significant freight and logistics strengths that will complement the existing commercial centres of Liverpool, Greater Penrith and Campbelltown-Macarthur, and will facilitate a new metropolitan centre, the Badgerys Creek Aerotropolis.
