Lendlease has appetite for more apartments in Sydney's Barangaroo
This article was first featured by the Australian Financial Review.
Global developer Lendlease is considering more apartments at the $9 billion Barangaroo South project in Sydney as fresh interest rate cuts reignite the city's booming property market. One of two low-rise buildings planned on Hickson Road, known simply as "C1", is being strongly examined for residential development, sources told The Australian Financial Review. It was reported that both C1 and its neighbouring building, International House Sydney (C2), were being marketed to office tenants earlier this year. Lendlease has confirmed C2 will be an office complex but Andrew Wilson, the managing director of Barangaroo South for Lendlease, said C1's future has not been determined.
"C1 is approved in the concept plan for either commercial or residential use, though no decision has been made on its design or use," he said.
There are already 900 apartments planned for the Lendlease portion of the 22-hectare Barangaroo. It is understood that Barangaroo Central, the 5-hectare site in between Barangaroo South and the Headland Park, will also have a large number of apartments. Billionaire James Packer's Crown Sydney hotel-casino, which will straddle Barangaroo South and Barangaroo Central when completed in a few years, will also have a high number of luxury apartments.
It comes as Sydney's auction clearance rate hit its highest level in 14 months last weekend. Listed developers such as Lendlease and Mirvac have reported a bullish outlook on housing at their full-year financial results this month. Despite concerns about housing settlements, Lendlease settled 4790 properties during the year, including the sale of 1200 apartments.
Low-rise sell well
Chief executive Steve McCann said less than 1 per cent of apartment sales had defaulted, well short of an historical average near 3 per cent.
Another reason Lendlease may pursue more apartments at the development is that other low-rise buildings at Barangaroo have been re-sold at a 50 per cent profit by investors. Many owners sold their $2 million two-bedroom apartments purchased in mid-2013 for $3 million two-and-a-half years later. C1 has 11,250 square metres of gross floor area plus ground floor retail and faces Hickson Road to the north of the second bridge crossing. C1's neighbouring building C2 will definitely be a commercial office building and the first in Australia made completely from timber. The six-storey building will be made from engineered wood – cross-laminated timber (CLT) and glulam (glue laminated timber).
"Given the strong interest we have received in the use of CLT for International House Sydney (C2) we are exploring the feasibility of C1 also being a timber building," Mr Wilson said.
However, one good reason why C1 may yet become another office building is Sydney's low office vacancy rate. The Sydney office leasing market is the lowest of all capital cities and landlords are benefiting from rising ren