Last month’s headline making launch of the Pacific Bondi Beach residential project in Sydney has been credited as the city’s most successful apartment sale campaign since the global financial crisis. The simultaneous launch in Sydney and Hong Kong far exceeded all expectations, with 74 of the 76 apartments in the first stage sold within just a few hours. On a sunny spring morning, crowds queued outside the display and within a few hours more than AU$160 million worth of apartments had been sold. About 20 per cent were snapped up by Hong Kong-based buyers – mostly expatriate Australians.
So why did this particular project generate such strong interest, particularly from offshore?
The level of interest and buyer demand shows that iconic locations are a huge draw in any market. The launch confirmed that Bondi is a true “international” beach. Notwithstanding that, the developers also modelled the project on international apartment towers that include boutique hotel, valet and concierge services; restaurant and bar precincts; shopping boutiques; and health club services. Purchasers were excited – not just about the lifestyle opportunity of beachfront living in an iconic development – but one that offered this range of amenities. And they were prepared to pay for the privilege with the premium apartments sold at rates per square metre pushing above AU$40,000.
Initially, the developers had planned to hold the higher priced apartments until completion. Known as the “Lighthouse” collection, these apartments were named for their domed roof structures. However, given the overwhelming demand, a number were sold at the initial launch, with a Hong Kong buyer paying in excess of AU$10.3 million for one of the Lighthouse apartments. In another sale, a European purchaser paid close to AU$9 million for a Lighthouse, breaking the Australian record price for a two bedroom apartment. The remaining Lighthouses will be released on October 6.
Pacific Bondi Beach looks set to be a similar catalyst for Sydney’s premium apartment market as Bennelong at Circular Quay was in 1995.
It has been some time since Australian property has been the focus of such strong expatriate interest. There is a view that some buyers see Pacific Bondi Beach as a currency play, given that there is a three-year delayed settlement period. However, there is generally an acute undersupply of new apartments in Sydney, rents are rising and vacancy rates are continuing to reduce. In this environment, and with interest rates lowering due to uncertainty in global equity markets, we expect to see a strong surge in off-plan apartment sales in Sydney over the next five years.