Norwest Property Market Update 1st Half of 2022
Positioned approximately 30km north-west of Sydney, Norwest is an area which encapsulates the suburbs of Baulkham Hills, Rouse Hill, Castle Hill, Norwest and Bella Vista. These suburbs are noted particularly for their commercial precincts, which include office and retail uses, as well as strata industrial properties.
The median commercial sale price in Norwest was $5,444 per sqm for Q4 2021. This represents half-yearly (Q2 2021 – Q4 2021) price softening of -30.1% and annual (Q4 2020 – Q4 2021) price softening of -44.4%. Stay at home orders were reintroduced for Greater Sydney in Q3 2021 – leading to reduced business revenue, which could be the primary reason for the price softening in the 2nd half of 2021. Commercial sales transactions significantly declined from Q3 to Q4 in 2021, when business confidence was at its lowest. Now that the restriction is lifted, the potential for an uplift in transaction figures and price is imminent.
With only 5 recorded sales in Q4 2021, the price per sqm for industrial properties in Norwest was $3,860 per sqm. This represents half-yearly (Q2 2021 – Q4 2021) price softening of -2.0%, but an annual (Q2 2020 – Q2 2021) price growth of +2.5%. Industrial property sales in Norwest remained limited, with just 3 sales in Q3 2021 and 5 sales in Q4 2021. Although sales volumes have declined considerably in the 12 month period (Q4 2020 – Q4 2021), median sale price per sqm peaked to it’s highest price in Q3 2021m at $4,334 per sqm. Further growth is expected in 2022 – stimulated by supply constraints, low vacancy’s, further expansion of e-commerce, and escalating competition for space.
The median commercial net lease rate for Norwest in Q4 2021 was at $366 per sqm. This represents a half-yearly (Q4 2020 – Q4 2021) softening of -3.7% and an annual price softening of -8.0% (Q4 2020 – Q4 2021). Leasing activity has increased significantly, with 61 leases recorded in Q4 2021 (compared to 18 in Q4 2020). Despite a decline in median net lease per sqm between Q4 2020 - Q4 2021, demand for office space outside of the Sydney CBD has increased. Businesses moved their operations to outer areas in order to save costs and accommodate working from home conditions.
Norwest’s median industrial net lease rate was $208 per sqm as of Q4 2021. This represents half-yearly (Q4 2020 – Q4 2021) price softening of -1.0%, however a significant annual price growth of 15.6% (Q4 2020 – Q4 2021). That said the annual price growth quoted is not entirely reflective of industrial pricing conditions, as net lease per sqm has recovered from an initial drop at the beginning of COVID-19. Leasing activity has improved since Q4 2020, with 20 leases recorded in Q4 2021, suggesting that leasing activity is slowly returning to levels seen in early 2020, prior to COVID-19. The leasing market is expected to strengthen into 2022, mainly due to rising consumer confidence. This has a multiplier effect of higher warehouse demand, as consumers increase goods and services spending.
Norwest is set to benefit from an estimated $3.2B of planned future project development, scheduled to commence between 2020-2022. There are 155 major projects commencing, which represents 84.3% of the original development pipeline. This is considered to be high, as 2020-2021 represented numerous uncertainties due to COVID-19 and the availability of materials.
