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No wonder the ultra-wealthy are now flocking to Sydney
WITH its pristine beaches, glistening harbour and enviable climate, you'd be forgiven for thinking of Sydney as a holiday destination. But for an increasing number of the world's wealthy, their ticket to Sydney is one-way.
More high-net-worth-individuals (defined as US$1 million +) immigrated to Sydney than any other city in the world at last count; a trend which is expected to continue. As more of the world's wealthy head Down Under, the number of Sydney's high-net-worth-individuals is expected to increase 70 per cent by 2026; while its population of ultra-wealthy (defined as US$50 million +) is expected to increase by 37 per cent in the next five years.
So why the sudden interest in Sydney?
There are a number of factors in play. There is strength in the Australian economy, with a stable, transparent government and investment opportunities abound. But there's also the fact that the world is getting smaller. With light speed Internet access and international travel more convenient than ever, proximity is no longer the issue it once was. The world is changing, and so is Sydney's position within it.
The Knight Frank City Wealth Index 2018, which considers wealth, investment, lifestyle and future factors, ranked Sydney the 11th best city in the world. For investment, it was ranked 7th best. In Q1 2018, US$1 million could buy you 49 sq m of prime property in Sydney, as opposed to only 37 sqm in Singapore, 27 sq m in London and 25 sq m in New York. And while there has been some talk about Sydney's mainstream market falling, the reality is, it has merely settled.
Almost untouched by the global financial crisis, Sydney's prime market (the top 5 per cent) has had an impressive sixteen consecutive quarters of top ten growth; a total growth of 61.7 per cent in the past ten years. As at March 2018, Sydney's prime annual capital growth was 8.7 per cent.
All things considered, Sydney's real estate market is as strong as it's ever been. The real issue for Sydney's wealthy arrivals has been the lack of high quality residences; there simply aren't any super-prime buildings in Sydney, top to toe.
While prime investment stock is established, inner-city luxury residences are limited to penthouses. For the ultra-wealthy, the benefits of immigrating to Sydney has come with the cost of giving up the style of luxury accommodations to which they've grown accustomed.
That's about to change. Sydney's Barangaroo precinct is currently undergoing one of the most significant urban renewal projects in Australia, transforming an inner-city wasteland into a prominent new neighbourhood.
Within its newest development, One Barangaroo - a construction tipped to become as iconic as the Harbour Bridge and Opera House - will stand the exclusive Crown Residences on 22 hectares of prime waterfront property.
As more of the world's wealthy shift their focus towards Sydney, the city is stepping up to the plate. Having consistently outperformed on an economic level, Sydney is now about to take its place in the global arena for luxury residential property, ranking it amongst the likes of London's One Hyde Park and New York's One57. It's hardly surprising, then, that the ultra-wealthy are now flocking to Sydney in droves.
- The writer is a director of sales and marketing at Knight Frank Australia.