Mercury Property Watch: Herron Todd White's latest report looks at the Illawarra's residential and commercial property markets

Property valuation and advisory company Herron Todd White have analysed movements within two key markets in the Illawarra.

Residential

Upon looking at recent renovation activity in the Illawarra, Chris McKenna, their residential team leader for NSW and ACT, said full renovations or knockdown-rebuilds are appearing in popular suburbs in the north or around the CBD, which typically have older stock built during the migration boom of the 1960s.

Read more: 'Sales have dried up': Illawarra's property market dives during lockdown

"These areas are transitioning and it is common to drive down a street such as O'Brien Street in Bulli or Storey and Donald Street in Fairy Meadow and see a real mix of new, modern homes next door to older original houses," he said.

Mr McKenna said the key to completing renovations of any scale during the current period is to find a builder who has proven experience and also availability.

"Most builders have been reporting a decent pipeline of work with new quotes still being prepared," he said.

"Recent economic issues seemingly have not put a dampener on renovation dreams."

Mr McKenna said reasons for renovating in the Illawarra can be wide-ranging.

He said flippers look to buy an older, run-down property, complete a full renovation and on-sell at a profit.

Time is important as the longer they take to renovate the property, the longer they have to pay holding costs. Thus, most flippers will not undertake any renovations that require DA approval.

Owner/occupiers tend to renovate their properties at varying stages of their ownership of the property.

Mr McKenna said first home buyers may not have a lot of spare cash to make too many updates initially, but as the years go by will look to spend their savings on renovations projects.

Commercial - Retail

Scott Russell, regional manager for Herron Todd White's commercial division said "one can't help but feel for" the retail sector in the Wollongong area, which has "fought many battles over the years to then be presented with a massive shock in March as the coronavirus pandemic wreaked havoc".

"In an instant, doors were closed, customers were locked up inside their homes, sales fell off a cliff and staff were laid off," he said.

"Cafes, restaurants and traditional shopfront retailers were most impacted while others, notably supermarket chains and those with a strong online presence, benefited from the mayhem."

He said JobKeeper has provided retailers and their employees with some relief.

Mr Russell said the short-term impact on the local retail property market is expected to be profound, with rents under massive pressure and the capital value of any retail asset not underpinned by a strong tenancy profile to be exposed.

"Landlords will need to be flexible in their lease negotiations with rent free periods likely to increase and other forms of tenant incentives to be considered," he said.

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