The demand for townhouses is on the rise as investors and developers look to capitalise on property amid the NSW government’s attempts to develop the “missing middle”.
Over the past nine months, CBRE’s manager for metropolitan investment, Xavier Rahme, has noticed investor demand shifting away from apartment developments to sites that support townhouse projects.
“The recent slowdown in growth of the residential unit market has spiked developer interest in townhouse development opportunities,” Mr Rahme said.
“Interest remains strong in apartment sites in blue chip locations within 10-15km of the Sydney CBD and close proximity to train stations.”
With the NSW government urging designers and builders to focus on the “missing middle”, CBRE has noticed a rise in interest in townhouses.
“Sydney’s housing sector is significantly undersupplied in the middle market, which is driving investors and developers to secure parcels that can capitalise on this untapped area of the market,” Mr Rahme said.
“The NSW government’s recently launched missing middle design competition highlights the emphasis on this important sector of the market, with a shift away from apartments to medium density development.”
The demand for townhouses has seen a rise in sales for CBRE, which is spending $48 million on the development of townhouses across metropolitan Sydney. This includes development approval in Lindfield for 16 townhouses, in Burwood for 10 townhouses, in Turramurra for 15 townhouses, and in North Rocks for 50 townhouses.
“These recent townhouse development site sales demonstrate the strength in demand from developers for this type of stock, which is driven by the vigorous demand for ‘missing middle’ housing across Sydney,” Mr Rahme said.
“Market feedback has indicated that banks and financial institutions are more enticed to lend on lower risk assets including townhouse developments, where pre-sales rates are particularly buoyant.”