Norwest Property Market Update 1st Half of 2020

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 $8,202 per sqm for Q4 2019. This represents half-yearly (Q2 2019 – Q4 2019) price growth of 15.2% and annual (Q4 2018 – Q4 2019) price growth of 6.5%, showing an overall positive trend. The variations in median sale price per sqm are attributed to the various commercial offerings transacted, as well as limited transaction volumes (with 11 sales recorded across Q4 2019).

In contrast, the median price per sqm for industrial properties in Norwest reflected a lower price point of $5,294 per sqm for Q4 2019. This represents half-yearly (Q2 2019 – Q4 2019) price growth of 25.3% and annual (Q4 2018 – Q4 2019) price growth of 23.8%. Sales of industrial properties in Norwest remain limited (with just 9 sales occurring in Q4 2019), meaning data remains somewhat volatile. However there is also a clear upward trend evident in the median price per sqm.

The median industrial net lease rate for Norwest in Q4 2019 was at $218 per sqm. This represented solid growth of 21.1% in the six months since Q2 2019 and growth of 15.9% in the 12 months since Q4 2018. Leasing activity increased strongly over the previous 12 months, with 32 leases recorded in Q4 2019. Given the limited market size, leases will naturally fluctuate. However the overall trend is clearly positive.

Norwest’s median commercial net lease rate was at $348 per sqm as of Q4 2019. This rate reflects a very minor softening of -0.6% in the six months since Q2 2019 and a greater softening of -10.4% in the 12 months since Q4 2018. Leasing activity remained stable over 12 months, with 14 leases recorded in Q4 2019. This is a slowdown on the last six months however, down from 20 leases in Q2 2019. Despite limited data, there is an overall clear softening trend in commercial leasing.

Norwest is set to benefit from an estimated $3.7B of development, scheduled to commence between 2018-2020. There are 135 major projects due to commence, which represents 88.1% of the original development pipeline, with approximately $506.3M (or 11.9%) either deferred or abandoned by developers.