‘Units Falling Flat’: Sydney Developer Delivers Blunt Warning

Property veteran Theo Onisforou says NSW planning reforms will unleash a surge in apartment supply—and flatten capital growth across the sector for years. “I believe anybody that buys a home unit today…will have no capital appreciation in the next five years,” the Angus Property and Development principal tells The Urban Developer . “I’m pessimistic.” He links the view directly to the state government’s push to unlock density across Sydney. “The only reason Sydney property is so highly valued is because we’ve had massive density controls for our whole lives,” he says. “The relaxation of the density controls by [NSW Premier] Minns will massively increase supply everywhere and to my mind will dampen capital appreciation for a very long time.” The reforms come as NSW attempts to meet its share of the National Housing Accord target of 1.2 million homes nationally by 2029, including 377,000 across the state. According to analysis by the Urban Development Institute of Australia, NSW could fall about 157,000 homes short of its Housing Accord target if current construction rates persist. Onisforou argues the scale of approvals raises a simple question about demand. “If we’re supposedly short tens of thousands of homes, where are all those people?” he asks. He points to western Sydney pricing as an early signal. “I don’t understand people buying homes in Parramatta based on the historic data which shows there’s been no appreciation [in the] last five years,” he says. Onisforou says the dynamics affecting western Sydney extend beyond supply. “I’m very bearish on the western suburbs,” he says. He points to both planning reform and climate, saying temperatures in the west can run five to seven degrees hotter than coastal suburbs on peak days. “Surely you’re better off being near the coast to have the benefit of the convection currents,” he says. ▲ The L-shaped Alexandria holding near Green Square Station, subject to multiple planning revisions since 2018. He also expects rental returns to soften as more projects move through the pipeline. “In response to the current state government’s open slather attitude to DAs, I believe…there is going to be a massive increase in the supply side of the equation particularly in the rental market,” he says. “And any increase in the supply, I believe will lead to a softening of the rental market and lead to a decrease in the return.” The view has already shaped his own development strategy. At 290-294 Botany Road in Alexandria, near Green Square Station, Onisforou has reworked plans for a 2561sq m L-shaped holding several times over the past eight years. The site carried proposals for office space, mixed use and a nine-storey build-to-rent scheme before returning this year as a $53.1-million co-living proposal with 232 rooms. “Pre Covid, I lodged a DA for an office building but it became too risky,” he says. “Then I thought I will just do a build to rent development. “So my changes are not a reflection of an indecisive individual but to do with I’m looking at what’s happening.” Built to keep Onisforou’s career spans decades of Sydney property cycles. He bought his first home in Surry Hills in the early 1970s, well before the suburb’s modern resurgence. In the mid-1990s he delivered one of Sydney’s early warehouse-to-residential conversions at 66 McLachlan Avenue in Rushcutters Bay, formerly the ABC headquarters. He later assembled and developed The Intersection at Paddington, a tightly held retail precinct spanning Glenmore Road and Oxford Street, which he continues to hold. In the NSW Southern Highlands, he developed The Intersection Bowral, a 2.5ha retail centre anchored by Harris Farm Markets. “I finished it in 2008, but I’ve expanded it three times since,” he says. ▲ The Intersection at Paddington, a tightly held retail precinct developed and retained by Theo Onisforou. Beyond development, Onisforou runs grazing land at Kangaloon in the Southern Highlands and often draws parallels between farming and property markets. “Graziers have always said the reason land keeps going up is because they’re not making any more of it,” he says. “But the one thing for sure that’s happening is they are making many, many, many more home units.” For two decades his philosophy has remained consistent. “Property is my passion,” he says. “I only develop what I keep and I only develop where I know it very well, therefore you’re more likely to get the decision right.” From 86 apartments to 232 rooms Existing tenants remain in place at Botany Road, with leases running to October 2027. The previously approved scheme for the site comprised a nine-storey build-to-rent development with 86 apartments, two basement levels and 88 car spaces. The revised concept drops a storey, reduces basement levels to one and cuts parking to 20 spaces while lifting residential yield to 232 co-living rooms. Plans propose demolition of two existing two-storey commercial buildings—a Federation-era warehouse dating from about 1912 and a mid-century brick structure—for an eight-storey mixed-use building with co-living rooms above ground-floor retail. Across seven residential levels the scheme includes 227 studio units and five two-bedroom units, each with kitchen and bathroom facilities. The basement would accommodate 214 bicycle spaces, with a further 46 at ground level, alongside vehicle parking accessed from Wyndham Street. Onisforou argues room size separates the project from prevailing co-living and student housing formats. “My smallest room is bigger than the biggest room in any SCAPE development,” he says. ▲ The existing two-storey commercial buildings at 290–294 Botany Road, Alexandria would make way for Angus Property and Development’s co-living proposal. “Every studio is a double room; the smallest one’s 26 square metres. “The average SCAPE rooms are 17sq m and the doubles I think are 24 square metres.” Onisforou says he is nervous that “everybody’s jumping on the 17 to 22sq m rooms”. “If there’s ever a softening in the market, my rooms which start at 26 metres will be much more popular,” he says. He frames the development less as trend-driven co-living and more as durable rental stock. “As far as I’m concerned, I am building a block of studio apartments,” he says. A recently completed project in the Southern Highlands reinforces his view. “I built a block at Bowral recently and I’ve never had a building with lower vacancy and lower turnover because everyone loves living there so much,” he says. Onisforou also questions reliance on international student demand. “I was very critical of student accommodation because I always thought: ‘what happens if China turns off the students?’,” he says. “What happens if India turns off the students? “And what happens if India does a deal with Oxford University and they build a campus in India? Then the desire to come here decreases suddenly.” ▲ A rendering of the nine-storey build-to-rent scheme of 86 apartments at 290-294 Botany Road, Alexandria, now superseded by a 232-room co-living proposal. Policy the ultimate price driver For Onisforou, the implications extend well beyond one project. He argues housing policy—not just demand—ultimately drives long-term price growth. He points to a popular high-end US ski resort town as an example of how strict planning controls can preserve scarcity. “In Aspen, Colorado, they still will not allow more than three storeys,” he says. He says local rules prevent any net loss of housing stock. If an owner reduces the number of homes on a site—such as by merging two apartments into one—the lost unit must be replaced or financially offset, preserving overall supply. The result, he says, is entrenched scarcity. A Prada shop in Aspen has reportedly been marketed for about US$80-million. He argues mechanisms designed to preserve housing numbers—rather than simply mandating inclusion within new projects—better protect long-term value. Onisforou also questions affordable housing rules, tied to some NSW planning incentives, where developers must allocate a portion of projects to discounted housing for a defined period. He says alternative models could maintain supply discipline without distorting market pricing. For Onisforou, planning reform will test long-held assumptions about Sydney’s property cycle.

‘Units Falling Flat’: Sydney Developer Delivers Blunt Warning

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