Business Insights | Is Sydney accelerating with the handbrake on?

Sydney is in the midst of a golden period. CBRE’s Asia Pacific Investor Intentions Survey has consistently ranked Sydney as a Top 3 investment destination. With its enviable lifestyle, robust economy, and status as a gateway city, it’s easy to feel the momentum building.

The city is poised for a new era of growth, one that could redefine its global standing. But as we accelerate, one question must be asked: are we pushing forward with the handbrake still on?

A city set for growth

The fundamentals are strong. This is reflected through Sydney’s growing population, the city’s business composition diversifying, and the economy remaining resilient. We’re seeing a triple boost from infrastructure investment, demographic momentum, and global capital flows.

The ongoing delivery of key infrastructure is connecting Sydney better than ever and facilitating the continuing expansion of Sydney as the population and economy grows. The Sydney Metro is a game changer which will benefit metro markets while providing ease of access to the Sydney CBD while the expanding toll road network is improving logistic movements, taking load off the existing road network and keeping Sydney moving.

Western Sydney, in particular, represents a generational opportunity. The Western Sydney International Airport is more than a transport hub; it’s a catalyst for economic transformation. The scale of development in and around the airport precinct will reinforce Western Sydney as the central hub of Sydney.

Sydney has also become the undisputed technology hub of Australia which will help attract Tech based talent and innovation. Sydney is also leading the growth and development of data centers with over 60% of the national share.

A global investment magnet

Sydney remains a compelling investment story. As one of the most attractive destinations for capital in the Asia-Pacific region, it is supported by political stability, a transparent legal system, and a deep pool of talent.

The city continues to draw strong global capital flows, particularly from institutional investors targeting infrastructure and commercial assets. Its deep liquidity, leadership in technology, and dominant share of national data center capacity reinforces Sydney’s appeal as a long-term investment hub.

NSW offers a more favourable investment climate supported by more predictable regulatory framework and liquidity. The improved streamlining of planning approvals and infrastructure commitments further enhance NSW’s attractiveness for capital deployment.

But with opportunity comes responsibility. Growth doesn’t happen by default. It requires vision, coordination, and execution. And right now, there are several real constraints still holding us back.

What’s slowing us down?

Despite the optimism, several structural blockers are acting as a drag on Sydney’s potential:

• Infrastructure lag: Delays in service utility connections and approvals (mainly power and water) are creating bottlenecks and slowing down development. These are solvable issues, but they require better coordination between government and industry. While significant major projects have been completed and are underway, we need to ensure infrastructure keeps pace with population and economic growth across Greater Sydney, and delivery timelines, cost blowouts and funding gaps are managed.
• Construction costs: Escalating costs are impacting project feasibility and investor confidence. This is particularly acute in residential and mixed-use developments, where margins are being squeezed. It’s also a major concern in commercial markets with economic rents in the office sector needing to increase by up to 40% to make development feasible.
• Residential unaffordability: Sydney is consistently ranked as one of the most unaffordable cities in the world with price to income ratios doubling over the past 20 years to around 12 times. This issue is being exacerbated by low supply, favoured destination for immigration and construction costs which have increased by almost 60% since pre-Covid.

Releasing the handbrake

So how do we unlock Sydney’s full potential?

• Fix the infrastructure basics: Improved utility service delivery and reducing red tape that slows down development is still critical. Reduce siloing and improve coordination between government agencies. Whilst significant progress has been made on transport infrastructure across NSW there is still a need to ensure ongoing funding certainty for major projects.
• Tackle construction costs: Encourage innovation in building methods, support local supply chains and deliver genuine construction sector productivity. Reduce labour shortages through targeted immigration, vocational training and apprenticeships, and improved workforce diversity.
• Accelerate housing supply: Turn positive planning policy changes into actual supply through stabilisation of construction costs, tax reform, targeted immigration and diversified housing models.

Sydney doesn’t need reinvention—it needs acceleration. But we can’t afford to stall. The opportunity is right here today, and it shouldn’t be wasted.

To hear from our CBRE business leaders on current topics and issues which are impacting real estate markets, visit our Content Creators site.