Low Maintenance Freehold Property Offers Opportunity for New Owner

A lower north shore Sydney boarding house has sold at auction for $5,365,000 as investors seek affordable living opportunities while the city’s rental boom continues.   

The Greenwich property features a 16 double room boarding house and one large four-bedroom residential terrace with a separate entrance and frontage.  

CBRE agents Toby Silk, Angus Beevers and Nicholas Heaton brokered the sale – the team’s third Sydney boarding house transaction this year. 

“Spurred by the housing boom , many investors have cashed out of their property assets and sold them to owner occupiers, taking rental stock off the market,” Mr Silk said. 

“There is now a huge shortage of rental stock, which is driving up rents and creating demand for boarding house assets. . This will only be exacerbated by rising migration in 2023 as the  government increases the migration cap to help combat the current labour shortages. “  

Built in 2014 and finished to a high standard, providing significant depreciation benefits, the 16 Greenwich Road property offers the new owners a secure income and a low maintenance freehold investment. 

The sale price reflects an initial yield of 5.5%.   

Offering views of the Sydney CBD and Harbour Bridge, the site is walking distance to St Leonards Train Station and is poised to benefit from the forthcoming Sydney Metro Station at Crows Nest.  

Interest in the sale was driven by the property’s location, in the health and education precinct of the lower north shore amongst educational establishments and hospitals 

“These locations always attract strong rental demand for boarding rooms from doctors, nurses, teachers, students and patient families. Good walkability is also important with transport, shops, cafes and parks all within walking distance with most of the incumbent tenants not having a car,” Mr Silk said.  

The sale follows the recent CBRE sales of two boarding houses on Sydney’s Northern Beaches which changed hands for close to $10 million.  

Mr Silk noted that rising interest rates had impacted sale yields, with the first boarding house transaction negotiated in March - before the first rate rise - on a yield of 4.5%, followed by the second transaction in May on a yield of 4.8% ahead of the latest Greenwich deal, which was struck on a yield of 5.5%. 

“This shows in real time the effect of rising interest rates on the property market and investors’ requirements for a higher yield to compensate for higher borrowing costs,” Mr Silk said. 

“That being said, boarding houses continue to attract significant interest in the current market as they provide a hedge against inflation given the ability to adjust rents in real time.”