Norwest Property Market Update 1st Half of 2021

Positioned approximately 30km north-west of Sydney, Norwest is an area which encapsulates the suburbs of Baulkham Hills, Rouse Hill, Castle Hill, 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 $9,719 per sqm for Q4 2020. This represents half-yearly (Q2 2020 – Q4 2020) price growth of 16.0% and annual (Q4 2019 – Q4 2020) price growth of 18.5%, showing an overall positive trend. COVID-19 seems to have had an impact on seller activity, however this has been counterbalanced by steady buyer demand which has resulted in an upswing in the median sale price per sqm.

In contrast to the commercial market, the median price per sqm for industrial properties in Norwest reflected a lower price point of $3,937 per sqm for Q4 2020. This represents half-yearly (Q2 2020 – Q4 2020) price softening of -7.0%. Furthermore, annual (Q4 2019 – Q4 2020) median price trends saw a -25.6% change, thus suggesting overall the market has seen a softening in median price. Industrial property sales in Norwest remain limited overall, with just 10 sales in Q4 2020. This said, 10 sales is a much stronger result than that of Q3 2020 (with just 3 sales).

The median commercial net lease rate for Norwest in Q4 2020 was at $398 per sqm. This represented a healthy growth of 4.7% in the six months since Q2 2020 and larger growth of 14.4% in the 12 months since Q4 2019. Leasing activity also increased over the previous 12 months, with 18 leases recorded in Q4 2020 (compared to 14 in Q4 2019). Given the limited market size, leases will fluctuate. However the overall trend continues to steadily increase.

Norwest’s median industrial net lease rate was at $180 per sqm as of Q4 2020. This rate signified a price softening of -17.8% in the six months since Q2 2020 and a softening of -17.4% in the 12 months since Q4 2019. Leasing activity continues to trend downward, with 10 leases recorded in Q4 2020. This is a slowdown on the last six months and 12 months, highlighting a slowing trend in industrial leasing activity. Despite limited data, an overall a trend of reduced demand is evident, which has translated into moderating median rental prices per sqm in the area.

Norwest is set to benefit from an estimated $8.0B of development, scheduled to commence between 2020-2022. There are 152 major projects due to commence, which represents 92.4% of the original development pipeline, with approximately $657.2M (or 7.6%) either deferred or abandoned by developers.