_Generational shift underway in Sydney unit block ownership

One of the largest generational shifts in the ownership of unit blocks in Sydney is underway, with many long-term owners choosing to realise the strong growth they have seen over the years and sell to a new generation.

May 20, 2025

Many properties of this asset type have changed hands over the past 18 months to two years, with no sign of transactional activity abating. Over the past six months,

Knight Frank has negotiated the sale of more than $70 million in unit blocks, with more deals in the pipeline.

The majority of apartment owners bringing their properties to the market have held them for the long-term, with unit blocks historically being the most premium asset class to own in the Sydney metropolitan commercial property market.

The security and long-term growth of apartment blocks has been consistent and strong, which is why many investors have held for the long term. With a shortage of residential property in Australia relative to demand, rental returns have risen significantly, particularly in the past few years, as have values.

Long-term owners are now realising those gains by cashing out, with one factor driving their decision being land tax. In New South Wales, land values have increased by 6.4% from July 2023 to July 2024, with additional increases on the horizon.

While many buyers are opting to cash out, apartment block buyers are still bullish on unit blocks as they believe the rental growth on the assets will in time outweigh the land tax payable. Rents have already grown considerably; according to the latest data the median rent for apartments has grown by 45% over the past three years.

With interest rates on the way down and the rental market showing no signs of slowing down due to limited supply, we are seeing that buyers are aggressively targeting apartment blocks. We have seen over a 22% uplift on enquiry on our unit blocks since this time last year.

In addition to strong income on offer for unit blocks, we are also seeing them available for below-replacement cost given inflation and increasing construction costs.
Our forecast is that strong buyer sentiment in the apartment block market will remain for at least the next two years as demand continues to outweigh supply in the residential market.

For more details contact Adam