NSW’s development market is showing signs of renewed confidence in the second half of 2025. While capital remains selective, the tone has shifted from caution to pragmatism. Sponsors and lenders are increasingly finding common ground, crafting capital structures that reflect current market realities rather than speculative optimism.
Debt is now being priced with greater realism over the hold period, and capital stacks are evolving. Senior bank finance is being blended with targeted non-bank funding and measured mezzanine or preferred equity. Terms are doing more of the heavy lifting, allowing feasible, well-located projects to gain traction once again.
Jake Smith, Manager of Investment Sales at Cushman & Wakefield NSW, “We’re seeing a more collaborative approach between developers and financiers. The market is rewarding projects that are genuinely deliverable, not just aspirational. It’s about structuring deals that work today and not relying on tomorrow’s upside.”
According to Cushman & Wakefield’s latest market insights, investor demand is increasingly focused on locations with a clear and compelling development narrative. Sites with strong amenity, transport connectivity, and transparent planning pathways, particularly infill and precinct-centre locations—are attracting the highest levels of enquiry.
Supporting this trend, NSW Government planning data* reveals that housing delivery is intensifying around rail and metro hubs. Through its Transport Oriented Development program, the state is rezoning eight station precincts to enable approximately 60,000 new homes over the next 15 years. Key areas include Bankstown (~14,000 homes), Burwood North (~15,000), and Macquarie Park (~9,600), highlighting the strategic importance of transit-linked development.
But Mr Smith said “Density must be deliverable, not theoretical. Buyers are prioritising efficient yield, logical built form, and credible timelines.”
Alternative living formats such as Build-to-Rent (BTR) and co-living are gaining traction, but only where operating returns genuinely support the residual land value. As Mr Smith puts it, “Feasibility has to pencil out on today’s numbers. Underwriting is anchored to today’s numbers, not tomorrow’s assumptions.”
For vendors, preparation is proving decisive. The market is rewarding a bankable narrative with clear planning, evidence-led feasibility, and disciplined campaigns that balance price and terms. Invitation-to-Tender and Expressions of Interest processes, supported by transparent data rooms, are tightening bid spreads and reducing friction in due diligence.
Mr Smith adds “Buyers want to underwrite with confidence. When vendors present a clear, well-supported case, it’s not just about price, it’s about certainty and speed.
One prime example is Sydney Metro’s integrated station developments which are actively delivering housing on top of new stations. At the future Sydney Olympic Park metro station, plans were recently amended to convert an office tower to residential, adding 191 extra apartments and bringing the over-station development to over 500 dwellings across three towers (27 to 45 storeys). The well-connected Olympic Park precinct, only ~15 minutes by metro to the CBD, is being transformed with new homes, retail and public spaces integrated into the station project.
Looking ahead, Mr Smith believes watchpoints remain. “Construction costs, while stabilising, are still elevated. Authority timeframes and contributions can shift assumptions, and capital will remain disciplined. But with funding structures more pragmatic and risk better allocated, competition is clustering around assets that can be delivered with clear end revenues.
“These are the projects most likely to set the pace in the second half of the year and they’re the ones shaping NSW’s development landscape in real time” he said.
*Source: NSW Planning, NSW Government External Link
