- Two boarding houses located on Pittswater Road in Sydney's north have sold for a combined $9.7M
- The houses contain 16 and 11 fully self-contained rooms, with a bathroom and kitchenette
- Asset has become popular with investor amid rental boom, as new generation boarding houses provide a modern and affordable spin
Two contemporary boarding houses located within coastal suburbs in northern Sydney have sold for a combined $9.7 million.
The boarding houses were sold to two separate local investors, and the sales were brokered by agents from CBRE‘s Metropolitan Investment team, Toby Silk, Nicholas Heaton and Aaron Arias.
CBRE representatives said Sydney’s rental boom is a key factor driving buyer interest in affordable accommodation investment opportunities.
“Boarding house assets are attractive in the current market as they’re placed to be a major beneficiary of the rental boom we’re experiencing amid ongoing housing affordability issues,” explained Mr Silk.
“Historically, investors were concerned with the intensive management these assets require but with the right structure and designs in place, including self-contained rooms, they can be quite passive.”
Toby Silk, CBRE’s Metropolitan Investment team
The priciest asset of the two, a 16-room freestanding boarding house named Barinya House, sold for $5.2 million on a net return of 4.8%.
The property is located at 789 Pittwater Road, Dee Why, and sits opposite of the Dee Why lagoon and in walking distance from the beach.
At the time of listing with CBRE, the property was tenanted at 100% occupancy.
Just a 7 km drive further south down Pittwater Road lies The Studios, a fully-furnished 11-room boarding house that comprises the second of the sales.
Located at 120 Pittwater Road, the new generation boarding house belongs to the popular beachside suburb of Manly.
The asset sold for $4.5 million, representing a yield of 4.5%.
Rooms in both boarding houses are described as fully self-contained comprising of a bedroom and living space, a bathroom and a kitchenette.
Boarding houses enter a new era
While boarding houses once had a less than clean rap among society, it seems the new generation of boarding houses are revolutionising the affordable housing game.
New age boarding houses are typically rented out fully furnished, complete with modern fixtures and fittings.
The clientele has also evolved significantly, with boarding houses now a popular choice among students and young workers looking for affordable accommodation that can be difficult to come by in sought-after city suburbs.
“These properties play a pivotal role in providing affordable accommodation for some integral industries while also offering accommodation for transient people.”
Aaron Arias, CBRE’s Metropolitan Investments team
He added that CBRE expects investor interest in these asset types will continue, particularly as rental growth outpaces future rate hikes and keeps yields steady.
“Recent changes to legislation around the construction of these assets in low density areas has also made future projects less feasible, which will help to underpin future rental growth,” concluded Mr Arias.