_The Property Perspective Episode 3 | Australian Prime Residential Review

In our third episode of The Property Perspective we are joined by Michelle Ciesielski, Partner, Head of Residential Research and Deborah Cullen, Partner, Head of Prestige Residential, NSW as they explore prime property, the top 5% of the market when ranked by value, in Sydney and further afield. 

Michelle Ciesielski: Welcome to Knight Frank's property perspective podcast. My name is Michelle Ciesielski, Partner and Head of Residential Research. And with me I have Deborah Cullen, Partner and Head of Prestige Residential in New South Wales.

Deborah Cullen: Thanks Michelle. I'm delighted to be here with you today.

Michelle Ciesielski: In our latest Australian Prime Residential Review, we drew a comparison of Sydney's prime property growth against other wealthy cities around the globe. At Knight Frank, we define prime property as the top 5% of the market when ranked by value. Interestingly, Sydney came out on top with 2.5% annual growth in June 2019 and this was ahead of Chicago, Singapore and Los Angeles. In fact, all of our major Australian cities, Melbourne, Brisbane, Perth, Gold Coast performed better than the remaining wealthy cities such as Hong Kong, Shanghai, New York and London, of which recorded negative annual growth over this time. So Deb, you live and breathe in this prestige property space. What are you currently experiencing in the market?

Deborah Cullen: Thanks Michelle. I certainly do. I have to say in Sydney, we are currently seeing some more urgency in the market, finally. I think it's been a challenging year for the market with the Royal commissions and elections, but they are well and truly out of the way now. So we are seeing people actively out competing, although stock is still quite low for this time of year and there are still quite a bit of off-market stock that we're seeing around. But hopefully that will come through and compete into the market to give it more buoyancy I think for the rest of the year. With regards to auction clearance rates and expression of interest closing times, they are certainly strong and we're seeing people come out and compete for beautiful properties in blue ribbon areas and I think the local market is particularly strong in this regard and we are seeing always as ever an active ex-pat market step in and compete wherever they can as well. 

Michelle Ciesielski: So Australian prime property continues to grow. When comparing the five cities against other global cities there also remains the relative value opportunities that we speak a lot about when buying with a foreign currency. So, for example, with an offshore investor purchasing in Sydney with US dollars, despite the market going up by 3% over the last year, they would have purchased the property for 3% less in June compared to June one year earlier. So Deb, what's your experience there?

Deborah Cullen: Absolutely. In fact, it's a common comment actually from our clients from Hong Kong and Singapore, which are particularly active at the moment. Not only do they remark on how much they can buy for their dollars here, they love how much space they can get along with such amazing views. In fact, I had one family remark when they purchased a very large home from us that it had a substantial library in it that they couldn't even dream of having a library in itself in Hong Kong. The children could only have electronic books because there wasn't a space anywhere. So I think we take these kinds of things for granted.

Michelle Ciesielski: We certainly do don't we.

Deborah Cullen: Yeah. And then even in comparing square meter rates for apartments, that one particular family who owns property all around the world commented to us that they paid far more per square meter for their Beijing penthouse than they were paying for theirs here. And I think, you know, here not only do they get more space, they also get to look at the Opera House and the Harbour Bridge. So things are looking good very much so I think for the prime market here, especially in Sydney.

Michelle Ciesielski: But coming up to the end of the year, what trends are you starting to see as we go into 2020 with the high-net-worth population?

Deborah Cullen: Well, I think our high-net-worth clients are always on the lookout for homes in those prime and blue ribbon locations. Waterfronts are still always actively sought and fought for. And in particular we're seeing a surge now for penthouses in prestigious locations once again with those beautiful views. I think, you know, part of our portfolio as well as our clients always like to have those lifestyle additions within their holdings. So the country homes and the beach houses and things like that are always still on the lookout for. But I think the downsizing market is something we're seeing a lot of energy for at the moment in Sydney. Clients looking to move out of very large mansion style homes or substantial suburban homes and moving to look into the city where there's more vibrancy and a bit more energy and restaurants and cafes and things around them. And we don't really have enough kind of stock for this in Sydney at this stage. And I suppose excitingly at Knight Frank we are very lucky to have the fabulous One Barangaroo luxury residences as part of our stock list, which we can show our clients and it's a very exclusive opportunity that they can choose to find something in the city and we can then help them timeline their downsize from the suburbs to move into the city and have another adventure in city life. So it's a really exciting point of difference for us.

Michelle Ciesielski: Thanks for speaking with me Deborah. For more information, please read our annual prime residential review.