Since 2020, Sydney’s property market may have risen, fallen and risen again.
However, for the city’s penthouses, the only way has been up.
We explore why penthouses and sub-penthouses have outperformed the market so noticeably in recent years and why they should be considered a whole new property category in our local market.
The rise of (large) apartment living
Over the past couple of decades, Sydneysiders have developed a taste for apartment living. In 2001, apartments made up just 23.9% of our city’s housing stock. By 2021, they accounted for almost 31%, according to census data.
But not all Sydney apartments were created equal, and not all have performed equally when it comes to capital growth. While prices for smaller apartments – such as one-bedders – have been relatively stable over the past few years, the value of larger and more prestigious apartments has been rising fast.
This can be seen in our local market, where larger apartments have far outperformed smaller ones. The median value of a one-bedroom Potts Point apartment remains down from where it was in 2021 ($765,000 vs $792,000), according to Domain. Meanwhile, the value of three-bedroom plus apartments is 13.3% higher ($4.9 million vs $4.325 million).
Penthouses at the peak
One of the key reasons for this is that penthouses, which usually fall into the three-plus bedroom category, are in demand. And the amount people are willing to pay has pushed the median value to new levels.
In fact, the most expensive residential property ever sold in Sydney – or Australia – was a CBD penthouse (for $140 million), not a freestanding home. The fifth most expensive property of all time was also a penthouse in the centre of the city.
Here in Potts Point and the inner eastern suburbs, we’ve been seeing penthouses (and sub-penthouses) going for record prices over the past few years, too – although their scarcity value means they don’t come up as often as many buyers would like.
Back in 2019, we sold 12/12 Onslow Street in a flat market for a then-record $9.75 million. Since then, we’ve had several other record sales, including:
- 902/15 Bayswater Road, a two-level penthouse in the Hampton building with an incredible rooftop terrace that sold for $6.6 million.
- 1905/226 Victoria Street, the amazing four-bedroom penthouse in Omnia, which sold for $12.5 million.
- 109/299 Forbes Street, a truly surprising, unique and secluded penthouse that achieved a sales price of $14.15 million.
- 7/29 Billyard Avenue, a sumptuous sub-penthouse designed by award-winning architects and interior designers SJB, that sold for circa $21 million.
Why are penthouses in such high demand?
Before we get into why penthouses are in such high demand, it’s probably worth defining what actually constitutes a penthouse in the first place.
Generally speaking, penthouses occupy an entire floor of a building – usually the top one. That tends to give them 360 degree views, something that’s highly sought after in our Harbour City. They’re also usually larger than normal and typically luxurious, with high ceilings and oversized (sometimes even floor-to-ceiling) windows. They tend to come with all the bells and whistles, especially high-end finishes.
In modern buildings, developers will usually build a penthouse (or two) on the top floors to capitalise on the strong demand for them. In other buildings, a penthouse is often an amalgamation of two or more apartments to create a grand residence (we’ve seen these in the Horizon Building, amongst other buildings).
Because of the incredible demand in this part of the market, a lot of developers also now build sub-penthouses into their developments too. These are similarly luxurious but typically smaller (there’s often two to a floor) and situated the level below the top floor.
Right now, we have a fantastic sub-penthouse for sale that’s in the Ikon building.
Situated at 81 Macleay Street, this apartment offers panoramic views from the seventeenth floor and features Arabescato & Blue Fusion marble throughout. Meanwhile, its expansive open-plan living/dining area flows through to a terrace, to embrace the extraordinary vista.
Who’s buying penthouses in Potts Point?
Downsizers are the main drivers of the penthouse and sub-penthouse market, just as they are in the luxury apartment market more broadly. Often these buyers have recently sold the family home in a good suburb and want to make the most of living near the action. But downsizers aren’t the only buyers in this category.
Increasingly, we’re seeing families buying penthouses in preference to a substantial family home. Their reasoning is that a penthouse can give them all the space of a family home with the added bonuses of extra convenience and less maintenance. That’s in addition to the wow factor that can come with living in a penthouse.
Why are penthouse values rising so fast?
Property prices are set by the laws of supply and demand – and the rising cost of penthouses is a direct result of low supply meeting growing demand.
An increasing number of buyers want the luxury of penthouse living, and there simply aren’t enough penthouses to satisfy them. For this reason, over the next few years, we expect to see a growing number of penthouses and sub-penthouses being developed through the amalgamation of existing apartments.
That said, there are some great new penthouses coming to the market as well.
Billyard Avenue is a new development concept for Potts Point, which aims to capitalise on the fact that some buyers only want the privacy and luxury that comes with penthouse living.
Due to be completed in 2024, it features just nine whole-of-floor apartments, each of which is essentially a penthouse boasting four bedrooms, four bathrooms and either stunning views or a garden setting.
If you’re interested in buying or selling in Potts Point and the eastern suburbs, contact my team today.