Why we invest in Sydney

Threefold Capital is based in St Leonards, and the businesses we want to own are within reach of our own front door. Part of that is practical. We take an active part in the businesses we invest in, and that is far easier across town than across the country. But it is also a considered view about where demand will be over the next decade. On the measures that matter most to an operating business, Sydney offers scale, a growing population and a long pipeline of public investment.

People in Greater Sydney at 30 June 2025, the most of any Australian capital city region

5.64 million

ABS

Projected population of Greater Sydney in 2041, on the NSW Government's narrower boundary, up from 4.9 million in 2021

6.3 million

NSW Government

NSW infrastructure program over the four years from 2026‑27

$116.7 billion

NSW Budget

A large market that keeps growing

Greater Sydney had 5,638,830 residents at 30 June 2025, according to the Australian Bureau of Statistics, ahead of Greater Melbourne at 5,435,590 on the same capital city boundaries. That is about one in five Australians in a single labour market and a single customer base. The city added 75,230 people over the year, a rise of 1.4%.

Where that growth comes from matters as much as its size.

Migration from overseas drives Sydney's growth

Change in Greater Sydney's population in the year to 30 June 2025, by source

1. Net overseas migration78,403
2. Births minus deaths30,109
3. Net moves to the rest of Australia−33,282
4. Total growth in the year75,230

The growth is not spread evenly. The fastest growing areas in 2024-25 were on the city's edges, around Box Hill, Nelson and Marsden Park in the north west and Austral in the south west, each adding more than 3,000 residents in a single year.

The NSW Government expects that pattern to continue. Its 2024 projections, which use a slightly narrower definition of Greater Sydney than the ABS, show the city growing from 4.9 million people in 2021 to 6.3 million in 2041, an increase of 28%. Some of the highest annual growth rates are projected in Camden (3.5%), Wollondilly (3.3%) and The Hills (2.7%), and the projections describe central and western Sydney as the fastest growing parts of the state. The population is also getting older. Across NSW, the share of people aged 65 and over is projected to rise from 17% to 21%.

For a business owner, those numbers describe new suburbs that will need the everyday services established areas take for granted: places to eat, train, play, learn and meet. They also describe an older customer base that will want health, leisure and social activity close to home.

A city being rebuilt around new transport

Three projects are set to change how Sydney moves over the next decade.

The airport alone has created more than 12,800 jobs, about half of them filled by local workers, and more than $500 million of its construction work has gone to over 360 local businesses, according to the Australian Government.

Around these projects sit the state's own commitments. The 2026-27 NSW Budget includes $116.7 billion of infrastructure over four years, with more than $30 billion in 2026-27 alone. The Budget also includes an extra $3.5 billion for transport and roads in Western Sydney and $5.2 billion for the water infrastructure that new housing in the west depends on.

Infrastructure helps a business in two ways. It moves customers and staff more easily, which widens the area a venue, a clinic or a shop can draw from. And it tends to bring housing, offices and shops with it, which builds that catchment year after year. We pay close attention to where new stations, roads and homes are going, because we believe businesses near them have a tailwind that can outlast a single economic cycle.

A deep base of businesses and workers

New South Wales added a net 26,057 businesses in 2025-26, according to the ABS count of actively trading businesses. Across Australia, 460,461 businesses started during the year and 375,331 closed, and almost all of the 2.8 million businesses trading at 30 June 2026 had no employees or fewer than 20.

That depth matters to an investor. Suppliers, tradespeople, advisers and staff are close at hand, and there are always good businesses whose owners are thinking about their next stage, whether that is growth, a partner or succession. It also means competition. In a city of this size, a customer who is not looked after has somewhere else to go the same afternoon.

The commercial property market shows the same mix of choice and scarcity. Office space is plentiful. Sydney CBD office vacancy was 13.3% in the Property Council's latest report, above its long run average of 9.1%, although vacancy in premium buildings fell to 7.7% as tenants moved to better space. Industrial space is not. Vacancy across Sydney's industrial and logistics market was 3.5% in the first half of 2026, according to CBRE. For a business that needs a large, open floor, such as an indoor sports venue, a warehouse or a workshop, finding the right building is often the hardest part of the plan.

The case against, and why we still choose Sydney

An honest case for Sydney has to include its costs.

Housing is the most obvious. Even after a 7.0% fall in values over the year to September, measured by Cotality, Sydney homes remain expensive by any measure, and the steady loss of residents to other parts of the country shows what that costs the city. High housing costs flow into wages, into rents for commercial space and into what households have left to spend.

Growth has also been slower lately.

The NSW economy grew more slowly than any other state or territory in 2024-25

Growth in real gross state product, 2024-25, per cent

1. Australian Capital Territory3.5%
2. Queensland2.2%
3. Australia1.4%
4. Western Australia1.3%
5. Victoria1.1%
6. South Australia1.0%
7. Tasmania1.0%
8. Northern Territory1.0%
9. New South Wales0.9%

Like the rest of the country, Sydney is also dealing with higher interest rates and fuel prices this year, which we look at in our view of the Sydney economy this spring.

None of this makes Sydney a place to avoid. It makes it a place to be selective. A business that earns its place here does so in front of one of the largest and most demanding customer bases in the country, and that is exactly the kind of business we want to own.

What it means for how we invest

Our approach follows from all of this.

• We stay close. We invest where a director can be on site regularly, and Sydney gives us a large field to choose from without leaving it.
• We follow the people. Population growth, new transport and new housing show where demand is building, often years before it appears in a business's accounts.
• We are careful with fixed costs. Where rent and wages are high, the lease and the roster decide whether a good business is also a profitable one.
• We look for businesses people use every week. We believe services that are part of people's routines, from sport and fitness to food and health, tend to hold up better when budgets are tight than occasional luxuries do.

Conclusion

Sydney's case rests on scale and on the long term, not on speed. The city added more than 75,000 people last year and has years of transport and infrastructure investment ahead of it. Against that, the NSW economy grew more slowly than any other state's in 2024-25, and the cost of housing keeps pushing residents elsewhere. In our view, that combination favours a particular kind of business: one that people use week after week, located where the population is growing, and run with tight control of its fixed costs. Those are the businesses we look for, and it is why we have chosen to build Threefold Capital in Sydney.

Our first investment reflects that thinking. House of Pickle Botany will be a seven court indoor pickleball club in Sydney's Eastern Suburbs, with parking on site, built for a fast growing sport that people play week after week. It is targeting an opening in December 2026, subject to the fit out and the necessary approvals. If you own a business in Sydney and are thinking about its next stage, we would be glad to hear from you.