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Waterfront Property Drives Prime Residential Market

One in three super-prime residential sales in Australia have been absolute waterfronts.

By Kanebridge News
Tue, Nov 30, 2021Grey Clock 2 min

As an island nation, it should come as no surprise that Australian’s are more willing than most to pay a premium for waterfront property.

However, in Knight Frank’s Australian Waterfront Premium 2022 report, the results indicate waterfront real estate represents a substantial share of super-prime sales, with one in three of the 374 sold over the last year located on the absolute waterfront.

Knight Frank’s report includes properties worth more than $10 million.

According to the report, the most popular type of waterfront super-prime sale was harbourside, representing 64% of super-prime sales in the last year — up from the 48% in Q3 of 3030.

This is in line with the super-prime surge witnessed this year, which shows the market more than doubled its volume in the first three quarters of 2021.

Properties with coastal frontage represented 16% of total sales in 2021, followed by 13% on canal, and 7% on river.

Knight Frank Australia Head of Research Michelle Ciesielski said waterfront real estate was obviously finite and tightly held, driving demand, particularly in Sydney.

“Sydney has taken the top position for greatest average uplift in waterfront sales this year, rising by 13.5% in the last year to 119% in Q3 2021,” Ms Ciesielski said.

This likely reflects the increase in price premium attributed to waterfront properties in 2021, increasing by 14% in the last year to represent a 79% price premium on their inland equivalents.

Elsewhere in Melbourne, waterfront homes experienced enormous growth.

“Waterfront homes in Melbourne have experienced the strongest growth of the five major Australian cities, with the waterfront premium increasing from 30 per cent in Q3 2020 to 37% in Q3 2021,” Ms Ciesielski added.

Away from the major markets of Sydney and Melbourne, the prime markets in both Gold Coast and Perth continue to grow with the Gold Coast following Sydney at a premium of 71% in Q3 2021, representing a growth of 5% year-on-year, and Perth recording an average uplift of 67% at 9.5% year-on-year growth.

“Brisbane’s prime market has been dominated by interstate buyers and local upsizers who favour riverfront real estate in prestige suburbs, averaging a waterfront premium of 54 per cent at a 14 per cent uplift,” Ms Ciesielski said.

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New research from Knight Frank’s International Waterfront Index shows waterfront properties are costing more than double their inland counterparts in Sydney while in Melbourne waterside properties attract a 40% premium.

Australia’s coastline attracts some of the highest waterfront premiums in the world with Sydney topping the index — an average premium of 121% — compared to an equivalent home set away from the water.

Auckland ranked second on the list of 17 international locations — a premium of 76%. The list saw Gold Coast (71%), Perth (69%) and the Cap d’Antibes (59%) on the French Riviera round out the top 5.

Australia continued to feature prominently in the research with Brisbane’s waterfront premium coming in at 55%, with Melbourne also in the top 10 at 39%.

According to Knight Frank Australia’s head of residential research, Michelle Ciesielski, there has always been strong appetite for Sydney’s waterfront homes.

Australia’s luxury residential market has advanced, it lacks the depth of prestige markets in more established global cities said Cieselski.

“As a result, our Australian cities can achieve a significantly higher premium on the waterfront compared to a similar property inland without access to, or a view of, water,” she said.

“Also, Australia is known for its balmy outdoor lifestyle, so many buyers in this super-prime space are willing to pay a premium to secure the ideal position along the waterfront.”

The data also suggests that beachfront homes were most desirable, commanding a premium of 63% compared to harbour locations fetching 62% premium and coastal homes with a 40% premium.