The median price of units sold in Potts Point in the final six months of last year was $748,500, up 25 per cent from the six months before the laws came into effect in December 2014, figures compiled by the Domain Group reveal. Domain Group is owned by Fairfax Media. Potts Point apartments are a winner with young women and same sex couples. Credit:Peter Bennetts The median price of units in the neighbouring Elizabeth Bay also jumped 17 per cent to $785,000. By comparison, unit prices in other water-side suburbs of comparable distance to the CBD were stagnant or fell last year. Milson Point unit prices lost 8.5 per cent while Pyrmont units gained just 0.6 per cent to a median of $900,000. Across the whole of Sydney, unit prices rose 8.7 per cent to a median of $655,845. The chief economist at Domain Group, which is owned by Fairfax Media, Andrew Wilson, said property prices around Kings Cross were playing "catch-up" since the clean up of the Golden Mile began.

"Unit prices in Potts Point are clearly on the rise with growth rates significantly higher than those recorded by Sydney overall and also above similar inner-city apartment markets." Dr Wilson said property in Potts Point remained relatively affordable compared to other prestige harbour-side locations in similar proximity to the CBD. Closed down: DreamGirls in Kings Cross. Credit:Kate Geraghty "Changes to the nature of the local neighbourhood, with sharply declining activity in the entertainment precinct, may also be a key factor in activating what is clearly now a vibrant and increasingly popular apartment market." The principal at Belle Property Potts Point, Dean Norburn, said the lockout laws had seen a rise in investors looking to ride a wave of gentrification.

"I just think that area is changing," he said. "I think there's a lot of confidence that in that area of Potts Point, there's going to be less riff raff. You can see it already in the restaurants. It's different. You can feel the change. Many investors are coming back in the market." Mr Norburn said the demography of the area remained quite diverse. "Same sex couples are quite strong in the area. Young couples who are working in the city. There are some downsizers." "I think investors are realising that there's going to be growth in that type of inner city living. I've got no doubt that that market is going to get even stronger." The former president of the Real Estate Institute of NSW and founder of Gunning Real Estate, Malcolm Gunning, said commercial property values in Kings Cross had taken a massive hit from the lockout laws. "The rents are down substantially," as much as 50 per cent on some commercial properties, Mr Gunning said.

But the opposite was true for residential real estate in the area, which includes some of the most expensive apartments in Sydney. "That postcode is now cleaning up and the restaurant market is kicking off," he said. "What's helped drive up the unit market is there's a lot of bed sits and one bedders in the area — they're affordable, so young first home buyers and investors are picking them up. "What we're seeing now is single professionals and lots of young women, in particular, are buying in that Potts Point area because there's good transport and Macleay Street's booming." Prostitutes and nightclubs had been supplanted by organic markets, antique book fairs and homeware stores, Mr Gunning said. "So now the upside for real estate is that the night club strip has, well, it's kind of still sleazy, but it's cleaning up, and you're starting to see a few more professional service providers sneaking into that area." Mr Gunning said the former Golden Mile was now bookended by new residential developments: the Bourbon Hotel at the northern end, which is about to be knocked down for apartments, and the old Crest Hotel at the southern end, which has been bought by Greenland Australia and will be redeveloped into 135 high-end apartments.

As for the former stripjoints and night clubs; many would end up becoming offices, Mr Gunning predicted. "The problem with that whole strip, a lot of those facades are heritage listed you can't get enough floorspace for apartments. I think a lot of those places will end up being restaurants, service providers and offices for other service providers."