Evaluating apartment value by price per square metre

Evaluating apartment value by price per square metre
Evaluating apartment value by price per square metre

There's no doubt that after location, it is the number of bedrooms and bathrooms that fundamentally determines the selection of an apartment to buy.

The aspect and view become important once you are inside.

The standard of fitout certainly comes into play in any pricing.

Over recent times apartment size has become a mild influencer as Sydneysiders embrace the purchasing reckoner that's more common in other international cities, especially across Asia. 

Calculating the per-square-metre price of apartments has emerged - especially for off the plan acquisitions - as a way to evaluate market value as it has been long done say at The Peak in Hong Kong.

Australia has typically used median apartment data in our calculations, and this has appropriately become more segmented given the obvious differences between studios and penthouses.

The sale of the two Opera Residences penthouse earlier this month that established new price records has highlighted the increased emphasis being given to price per square metre.

They sold at $26 million and $27 million, but details released showed these expensive penthouses fetched a stellar $95,000 per sqm. 

The price level is unquestionably comparable to much of Manhattan in New York and Knightsbridge in London. Though not quite matching the world's most expensive apartment currently for sale in Monaco. 

The five floor La Tour Odeon penthouse, designed by the Monegasque architect Alexandre Giraldi, featuring a pool with a waterslide, comes with a reported $US335 million asking price for its 31,500-square foot (2900 sqm) space which equates to $US122,000.

The Sydney Opera Residences penthouses came with around 275 sqm internal space, with three bedrooms, four bathrooms and a triple lock up garage. 

The sub-penthouses in the Macquarie Street complex sold for around $16 million so reflected around $85,000 per sqm. They had an internal area of 183sqm and came with two car spaces. 

The sales represented a big jump on prior benchmarks.

The previous highest recorded rate per square metre was set in the nearby Bennelong "Toaster" development in 2008 when the Moran family bought an adjoining 260-square-metre penthouse for $16.8 million.

At $64,000 a square metre there was something of a one-off premium because the Moran’s planned to extend, so we happy to pay the opportunity cost.

Until the latest price hike, Omnia, Kings Cross’s newest development, held the price per square metre honours after an $11 million penthouse off-the-plan sale last year. It reflected $62,000 per square metre price.

The price per square metre trend has mostly come to the fore due to the off the plan marketing of new high density projects across Sydney. 

But ever since the 13-storey Astor highrise was built on Macquarie Street in the 1920s, Sydney has led the nation in apartment living popularity.

Sydney has 21 square kilometres of what's called high density, Melbourne has one square km with no other city in Australia ranked.

By comparison London has 327 square kilometres where there is a similar high density of 8,000 plus people per square kilometre.

There's been interesting subsequent research from the Urban Taskforce that demonstrates that apartment values per square metre actually go up with greater density. 

An typical apartment in high rise Chatswood will be $9,000 a square metre compared with a mid-rise apartment in Lindfield at $6500. Potts Point apartments are selling at an $11,000 per square metre, compared to Edgecliff's $8300 per sqm.

Parramatta apartments have been selling at $6000 per square metre while Westmead is $4750 per square metre. Randwick apartments at $9300 and Zetland at $6600 psm.

While I think price per square metre calculations are very handy, they ought not be the reason to buy or not buy. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Residential Apartments Apartment Size

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