Investment interest in Newcastle is soaring
Newcastle, once seen as a regional outpost of Sydney, is transforming into a city in its own right. And while growth has been spectacular in the past 18 months, the median house price, which has just ticked over the $600,000 mark, is still about half that of Sydney. Growth rates were as high as 25 per cent at their peak per year. In the September quarter, prices dipped by 2.5 per cent, however the median price was still a 13.3 per cent rise year-on-year.
Dr Nicola Powell, data scientist with the Domain Group, said while double digit growth is not sustainable, Newcastle was coming into its own. “We’ve seen it as a regional area but now it’s absolutely transforming and changing into a city in its own right,” Powell says. “You have the CBD revitalising and rezoning, you’ve got economic growth, the university is expanding, you’ve got major spending on infrastructure like the light rail and you’ve got a boost in tourism with the new cruise terminal coming online. These are all really positive things for Newcastle’s economy.”
She notes that there is an enormous amount of development going on in the city. “And I’ve heard from developers that new apartment developments are selling out within days of coming on the market,” she says. “This illustrates the high level of demand in Newcastle.”
Luke Berry, sales and marketing director for the Thirdi Group, which is behind several apartment developments in the city, says Newcastle has all key indicators that drive investment. “There is record public- and private-sector investment, new infrastructure projects making the city more connected and liveable than ever before, strong investment in education – the only recession-proof industry in Australia – as well as solid population growth,” Berry says.
He says that these factors, combined with Newcastle’s development limitations – constrained by both its age (Newcastle is almost as old as The Rocks in Sydney) and history as a mining city – means you will never have a massive run of supply which impacts potential capital growth and return on investment.
We’ve got $60 million in capital earmarked to stay in Newcastle as it goes through this exciting evolution.Luke Berry, Thirdi Group
“This makes Newcastle a sound place to invest,” he says. “We’ve got $60 million in capital earmarked to stay in Newcastle as it goes through this exciting evolution to become one of the most liveable cities in Australia.”
Newcastle has reinvented itself, transforming from a blue-collar industrial town reliant on one major employer to a city offering a number of diverse industries, including pillar sectors such as health and education. The government has sold the Port of Newcastle, the world’s biggest coal port, and reinvested an estimated $600 million into the CBD to truncate the heavy rail line and make the city more connected. “There’s no other place in Australia experiencing that sort of level of investment and vision, making it one of the country’s best investment destinations,” Berry says.
Newcastle continues to tick all the boxes for first-home buyers, investors, change-over buyers and the burgeoning prestige market. Units and apartments, particularly coastal inner-city property, are particularly in demand.
Developer Sam Arnaout, the man behind Iris Capital’s transformational $750 million East End development, says apartment living in the inner city is one of the major drivers of Newcastle’s strong growth, given the quality of life it offers buyers such as proximity to beaches, the harbour and other amenities.
Arnaout says the high level of government investment in infrastructure, particularly the light rail, and expansion of the university’s city campuses, underpinned his decision to invest in the city. “Capital gain is almost assured because we haven’t yet seen the result of new government infrastructure, while the university is still growing,” he says.
Arnaout says that Newcastle is blessed geographically, with proximity to the harbour and beaches making it a highly desirable place to live. He says that while the city remains fragmented, it will benefit in years to come from having a world-class urban village space delivered by the East End. “It’s a catalyst site that will reposition Newcastle,” he says.