Why the mega-rich have set their sights on luxury inner-city apartments

A mansion in Mosman? A spread in South Yarra? A stately home in Hamilton?

Not so much these days.

Today, the big money is being spent much closer to city CBDs to acquire luxury apartments in prestige buildings with the very latest in security systems and top-range fixtures, finishes and amenities.

So, in Sydney, that means some of the most upmarket new developments, like 111 Castlereagh, One Sydney Harbour and The Crown Residences at Barangaroo. In  Melbourne, it’s Melbourne Square on Southbank, The Address in East Melbourne and Aspire Melbourne in the CBD’s heart, while Brisbane’s New Farm is nabbing much of the cash that would have once flowed directly to old favourites Hamilton and Ascot.

And with Australia’s ultra-wealthy population – those people worth $US30 million or more – growing by an unprecedented almost 11 per cent last year alone – compared to a 2.4 per cent global increase – that means there’s an awful lot of money around to pay some staggering prices.

“The stock market has performed rather well, and prices have been rising for the properties the ultra-wealthy have been living in, as well as their second and third homes,” said Knight Frank director of research Michelle Ciesielski.

“People have had more time on their hands during the pandemic, and their collectables, like classic cars, art and yachts, have also appreciated significantly.

“In addition, Australia was seen to have been handling the pandemic quite well, so some of our wealthy ex-pats came back here before we closed our international borders, and the commercial exchange rate was favourable for people coming here on US dollars and Euros. Now, no one can leave, so there’s a lot of wealth trapped in the country.”

As a result, most of the new projects are being marketed almost exclusively to the domestic population, whereas once they would have been routinely touted to buyers in Asia, Europe and the US as well.

At 111 Castlereagh, for instance, already 20 per cent of the 101-apartment development being built on the site of the old Market Street David Jones store, have been sold, including one sub-penthouse for around $18 million, with a second to be confirmed.

“Our buyers have come from the eastern suburbs of Sydney and regional NSW,” says Peter Chittenden, Colliers managing director residential.

“They tend to be well-to-do, understated people looking for privacy, quality and low-maintenance homes in a prime location by Hyde Park. Many are coming to look at the display suite for a premium two-bedroom at $7 million or $8 million, and then choosing to upsize to a three.”

With no one going on overseas holidays, says Cbus Property CEO Adrian Pozzo, locals seem to be choosing to invest more in their homes or city apartments as well as beach or country houses. “People have the opportunity now to think about the next stage of their lives,” he says.

“They’re looking at the amenities around the city, the views from this building, the park, the shops, and knowing they won’t have to commute to the city. And they’re finding the price points attractive. We’re appealing to the home market, and that’s tracking very well.”

Similarly, over at Lendlease’s Renzo Piano-designed Tower 1 at One Sydney Harbour, it’s locals who are buying big, including the $140 million penthouse, Australia’s most expensive property sale.

“Ninety per cent of our customers are locals,” says Leanne Boyle, executive development director at developer Lendlease. “We’ve had very few foreign investor sales.”

It seems the appeal of living in the city has never been stronger. Semi-retired chartered accountant Rob Ward, 67, for instance, bought a sub-penthouse in Macquarie Apartments between the CBD and the Opera House.

He and his wife Louise, 66, who runs a tour business to Argentina, had earlier lived in an apartment in New York for seven years, so they knew what city apartment-living was all about.

“For us, this is perfect,” says Ward, who’s also bought an apartment in the centre of the Southern Highlands’ Bowral in new complex Maynard Gardens.

“As I stand here, I’m looking out over the Botanic Gardens and the harbour, and it’s just very beautiful. Our apartment is pretty big, so we have plenty of space, and we can walk down to the Opera House, the Capitol Theatre, everywhere.

“During lockdown, it’s quiet, but it will come back, no doubt about it. You can run a business forever working from home. The CBD has changed a lot, and it’s usually so lively and is constantly changing.”

In Melbourne, the demand for luxe apartments around the city is similarly strong. The Real Estate Buyers Agents Association of Australia’s Melbourne-based president Cate Bakos says there’s now a huge number of high-net-worth individuals around, many of whom have significant inheritances, have perhaps sold their businesses for large sums or have made their fortunes in tech industries.

“Now they’re looking for very exxy top-of-the-market apartments with fantastic security, great outlooks, good locations and with beautiful swimming pools, courtyards and gardens, that all come for a price,” she says.

“I think it always comes as a surprise to know how many of these high-net-worth people are around.”