Wollongong Real Estate Insights - Industrial, Office and Residential Markets - Sept 2018 Knight Frank Report
Wollongong Insight - September 2018 Report
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The below is an exert from the comprehensive report released by Knight Frank. The report includes information on the growth drivers, demographic trends and market outlook of the Wollongong Office, Industrial and Residential markets. Click here to download a copy of the full report.
With a current population of 213,841 persons, the Wollongong LGA is expected to grow to 244,800 persons by 2036, an increase of 14.5% compared with June 2017.
Gross Regional Product (GRP) was estimated to be $13.38 billion in 2017 for the Wollongong LGA, representing 59% of the Illawarra region’s GRP.
Office market conditions continue to improve, owing to the rise of the shared services sector with tenants seeing Wollongong as an attractive place to do business. However, a lack of large contiguous A-grade leasing options in the market has placed a cap on demand. Limited leasing options are causing rents to rise.
Yield disparity between Sydney’s metro markets and Wollongong is driving demand for quality stock across the office and industrial sectors.
Tenant migration from Sydney and increased demand from port related industries has seen a large improvement in Wollongong’s industrial market.
Rising demand, led by first home buyers continues to drive residential prices across Wollongong which increased by 6.2% over the 12 months to June 2018.
Wollongong in Context
Strategically located 80 kilometres south of the Sydney CBD, Wollongong is continuing to show signs of a transition away from its historic heavy industrial roots, highlighted by increasing interest from national and international investors.
In recent years the City has benefited from a $200 million upgrade to the Wollongong Central Shopping Centre, a $120 million redevelopment of Crown Street Mall and $156 million in spending on expanding both the public and private hospitals. Further investment will flow from The University of Wollongong’s (UOW) Strategic Plan which sets out capital expenditure plans which will release in excess of $300 million within the next four years.
An uplift in the region’s key employing industries of health care and education has meant that population growth has stemmed from incoming skilled workers. At the same time, resilient demand from domestic and overseas students attending The University has propelled population growth in younger age cohorts. As the UOW continues to maintain its upward performance within the annual ranking of the worlds universities, sitting in the top 2%, demand and enrolments are projected to grow.
At an Illawarra regional level the NSW Government, through its final budget before the election, has committed $101 million in 2018-19 to begin construction of the Berry to Bomaderry Princes Highway upgrade and $65.6 million to begin construction of the Albion Park Rail bypass.
In addition to allocating millions more to other local transport projects, including $648.2 million towards the modernisation of rail infrastructure to deliver improvements on the T4 Eastern Suburbs and Illawarra Line among other lines, Wollongong is well placed to benefit from improving accessibility.
Whilst these infrastructure projects will have significant implications on a broad mix of industries and the general population, for real estate markets, these projects will ultimately shape and determine the direction and magnitude of demand for expansion and additional space in key markets, be it office demand in the Wollongong CBD or industrial space across the Illawarra region.
Illawarra Migration Trends
The Illawarra region has enjoyed solid population growth over the last decade, prompted largely by a pick-up in net overseas migration. Since 2007, population growth across the Illawarra region has averaged 1.1% per annum with 84 new residents moving into the region on average each week. Over the past 12 months, 67% of the region’s population growth stemmed from Net Overseas Migration while a further 21% came from Net Interstate Migration.
Given the region’s natural beauty, close proximity to Sydney and access to a large labour market in its own right, the area has attracted significant inbound migration in recent years. Using the recently released 2016 Census, we are able to determine the location of where new residents of the Illawarra region moved from since the 2011 Census.
Excluding internal movements within the Illawarra, almost 51,000 persons moved to the Illawarra region between the 2011 and 2016 Census period (gross), 22% of which came from persons moving from overseas.
With median house prices in Sydney approaching $1 million, Sydney residents are increasingly looking to relocate to the Illawarra region. Despite the Illawarra recording similar house price growth to Sydney, the price differential between the two is $316,000 (see Figure 3), which is close to historical highs. Driven by affordability, 22,381 persons (or 44%) moved from Sydney to the Illawarra between the 2011 and 2016 Census, underpinned by movements from the Sutherland Shire, Campbelltown, Canterbury-Bankstown and the Inner West. Elsewhere, 3,064 persons moved from Queensland, 1,594 from the ACT and 1,575 from Victoria.
Taking into account outward migration (persons who left the Illawarra), net migration into the Illawarra totalled 20,740 persons over the five years to 2016.
Other areas of the Wollongong Insight Report
- Local Market Demographics
- Office Market
- Industrial Market
- Residential Market
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