Sydney residential values up 137 percent in 10 years, fourth behind Mumbai: Savills
The value of residential property in Sydney has risen 137 percent over the last 10 years to rank fourth behind Mumbai (184 pe cent) in a list of world cities, according to new research by Savills.
The Irish capital Dublin was at the other end of the scale, with capital value declining 26 percent over the same period.
Ten-year residential capital value growth in all global cities surveyed averaged 73 percent to the end of 2015, with Asian cities, including Shanghai (173 percent), Hong Kong (167 percent) and Mumbai, occupying the top three positions.
Savills Australia’s national Head of Research, Tony Crabb, said while it was unlikely the high level of growth these key cities had achieved in recent years was sustainable in the long term, Australia’s strong property fundamentals, including robust population growth, would nevertheless underpin a continued high level of performance, particularly along the eastern seaboard.
"Australia’s population growth is amongst the strongest in the world and is the strongest in its history. This creates ongoing demand for residential property as well as retail goods and services which feeds into logistics, warehousing and manufacturing and ultimately demand for office property and the two cities which will benefit the most from this trend are Sydney and Melbourne.
"As the population of these two cities is set to double over the next 35 years, the key driver of long-term growth is in place, and that should see Sydney remain near the head of the table in the medium term,’’ Crabb said.
Head of Savills World Research, Yolande Barnes, said the roller-coaster ride of the global financial crisis had presented an opportunity for real estate in new and emerging markets, particularly Asia, to rival those in the West, with price growth in the new and emerging economies averaging 123 percent between December 2005 and mid-2011, compared with just 32 percent in the established cities of the old world - Paris, Tokyo, London, Sydney and New York.
She said while capital growth fortunes reversed in the years since 2011 - old world markets grew by an average of 35 per cent and new world markets by just six per cent to December 2015 - the Asian cities remained at or near the top of the table.
However, the Asian cities at the top may now be more fully valued and therefore more exposed to price falls or stagnation, particularly during economic recession.
"Our analysis of occupier demands and rental growth across all sectors (residential and commercial) should prove a good guide to the fundamentals of different markets and would seem to point to the best prospects for capital growth lying among the cities at the foot of the table, which are enjoying population growth and occupier demand from burgeoning digital and creative industries,’’ Barnes said.
Those nearest the bottom of the table with the lowest rates of growth were in the high-supply US cities of Miami, LA and Chicago, while Dublin’s residential values remain 26 percent below its 2005 levels, although this represents recovery after an incredible fall from its 2006 peak to its 2012 trough of -57 percent.