Affordable accommodation offers opportunity for investors

Sydney – June 2nd, 2022 – Two new age boarding houses on Sydney’s Northern Beaches have changed hands for close to $10 million as the city’s rental boom spurs buyer interest in affordable accommodation investment opportunities. 

Toby Silk, Nicholas Heaton and Aaron Arias from CBRE’s Metropolitan Investments team brokered the two sales to separate local investors. 

“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,” Mr Silk said. 

“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.”

Barinya House, a 16-room free standing boarding house at 789 Pittwater Road, Dee Why sold for $5,200,000 representing a 4.8% net return. 

The Studios, a fully furnished 11-room boarding house at 120 Pittwater Road, Manly sold for $4,500,000 representing a yield of 4.5%.

Both assets provided fully self-contained rooms with bathrooms and kitchenettes.

“These properties play a pivotal role in providing affordable accommodation for some integral industries while also offering accommodation for transient people,” Mr  Arias said. 

“We expect rental growth to outpace future rate hikes and keep yields steady, which will continue to drive interest in these types of investment opportunities .

“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.”