Sydney is great for property investment

On a global scale, Sydney is great for property investment, according to new figures published jointly by PricewaterhouseCoopers and the Urban Land Institute.

A new report titled Emerging Trends in Real Estate Asia Pacific 2012 identified Sydney as the third most favourable market in the region for commercial property investment – jumping up three places from its sixth-place ranking in 2011.

Sydney was also ranked highly when it comes to development prospects, moving to ninth place from 16th place last year.

Residential property in Sydney also has plenty of investor appeal, according to Tim McKibbin, chief executive of the Real Estate Institute of New South Wales.

In a media release published on Sunday summarising weekly activity in the state property market, he asserted that current conditions favour investors.

National increases in rents – highlighted by the Reserve Bank of Australia’s February statement on monetary policy – as well as tight vacancy rates may make Sydney property investment particularly appealing, he explained.

This statement echoed figures released at the end of last month as part of the preliminary RP Data-Rismark Home Value Index, which revealed that across Australia’s capital cities, weekly rents rose by one per cent in the December quarter.

Tim Lawless, director of research at RP Data, said: “These higher rental rates combined with the slide in property values have improved investors’ yields.” This means the cost of holding Sydney real estate is much lower compared to recent years, reducing financial strains on property investors who are buying into the market now.

Lawless also noted that on average, property investors who own capital city dwellings can expect average gross rental returns of 4.6 per cent.

This, he explained, represents a “consistent trend upwards since mid-2010” – average yields at this time for a typical capital city dwelling stood at 4.1 per cent.

Sydney is great for property investment as gross yields in Sydney, he added, are “better than average” for investors, along with Hobart, Brisbane, Canberra and Darwin.

By Steve McKnight

Steve McKnight, the founder of PropertyInvesting.com, is a respected property investing authority as well as Australia's #1 best-selling business author.