Suburb spotlight: High yielding Ultimo may be set for another decade of change

Fast changing and high yielding Ultimo is a source of fascination for many Sydney residents. It’s an area that is largely known for its education hubs, but is quickly becoming known for new developments and a growing affluent crowd.

In fact, much of these changes seem to hang on the new $2 billion Central Park development that has sprung up so quickly, and is designed so carefully, that it appears to have grown out of the ground itself. It saw commercial interests swooping in earlier in the development, and is now steadily part of the changing face of the area.

Conveniently placed in the heart of the action, near Central Station on one side, close to the University of Technology, the University of Sydney, TAFE and a number of other financial institutions, and a short walk from Chinatown, Paddys Markets Broadway Shopping Centre and the cultural delights of Glebe, it’s hard to think of something that the Ultimo area doesn’t have.

RP Data notes the current unit price for the area at $252,500, while the median asking rent sits at $550 a week. That’s a ridiculously impressive rental yield of 11.3%.

Just several years ago, there was an abundance of lower-status pubs along the road, largely frequented by university students, and it’s clear that the caliber is slowly changing – helped by the new shopping precinct on the ground floor of Central Park. There are also a number of boutique-style shops and cafes that cannot be called anything other than ‘hipster’. The mood of change is also evident with the number of cranes dotting the skyline, as well as the number of signs of development and property sales, such as show rooms.

The University of Technology campus is changing, with current construction walls covering some of the buildings in a $1 billion redevelopment. This should do good things for the streetscape.

The growing suburb, as of 2011 census, had 67.6% of dwellings rented, with a scary 40.7% of tenants paying more than 30% of their income on rent, meanwhile 93.2% of mortgage holders are paying less than 30% of their income as their mortgage repayment.

An analysis from the Sydney Harbour Foreshore Authority comparing 1994 to 2004 showed that it had been a strong 10 years of change.

From 5,000 jobs in 1994 across Pyrmont and Ultimo, this skyrocketed to 22,000 in 2004. Affordable housing was introduced, more buildings were given a heritage overlay, an emphasis on green space was introduced and pedestrian links were also brought in. The median unit and house prices more than doubled over this period.

“In 1994 Ultimo and Pyrmont resembled a building site. Fewer than 5,000 people lived on the 1.6km peninsula adjoining the Sydney CBD. Disused industrial structures were being cleared and everywhere bulldozers turned over soil, hardhats were worn and the foundations laid for the rebirth of a neighbourhood,” it explains.

“In 2004 Ultimo and Pyrmont is a place renewed. A peninsular of old industrial buildings and smokestacks has more than eight hectares of new parks. More than 13,000 residents now live in the two postcodes – addresses characterised by high quality medium-density housing designed for a mixed and harmonious community.”

Since 2004, the area has clearly changed dramatically yet again, and it has become ripe for developments. In fact, City West Housing has 200 units planned for delivery either this year or in 2015.

And now, in 2014, we’re seeing the next stage of gentrification for the area. However, whether this will translate into another doubling of prices is yet to be seen.

jduke@propertyobserver.com.au

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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