boarding houses one of australia’s strongest investment classes during covid-19

boarding houses one of australia’s strongest investment classes during covid-19

September 2020
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Boarding houses one of Australia’s strongest investment classes during COVID-19
  • Around $10 million in sales have taken place for boarding house development sites over the past three months, demonstrating the resilience of the investment type
  • A 28-room DA approved boarding house development site at 10 Naree Road in Frenchs Forest recently sold prior to auction for above $3m, while an approved 319.4sq m Summer Hill site purchased for a build to rent scheme sold for $1.975m at auction in deals negotiated by Knight Frank.
  • A third DA approved boarding house development also changed hands in recent weeks with an Ashfield property selling off-market in the mid $3m range

Sydney, Australia – BOARDING houses have proven to be one of the most resilient investments during COVID-19 with strong buyer demand leading to around $10 million in sales over the past three months.

Two development sites with approval for boarding houses have recently been sold in deals negotiated by Knight Frank, with a third sale of a boutique site sold for build to rent purposes.

A 975.5sq m property at 10 Naree Road in Frenchs Forest with approval for the demolition of an existing residential property and construction of a boutique 28 self-contained studio apartment ‘new generation’ boarding house was sold prior to auction for above $3 million. The property was sold by Anthony Pirrottina, Demi Carigliano and Arland Domingo of Knight Frank after strong competition from local developers.

Another property at 88 Liverpool Road in Summer Hill, a 319.4sq m site with approval for a mixed-use development comprising one commercial tenancy and eight residential apartments totalling 465sq m, sold for $1.975 million after 111 bids at auction. The deal was negotiated by Anthony Pirrottina and Demi Carigliano of Knight Frank to a purchaser seeking to develop and retain the property as a mini ‘build to rent’ scheme.

A third DA approved boarding house development was transacted in the mid $3 million range offmarket in Ashfield to a local developer seeking to bolster their exposure to the boarding house and
Inner West Sydney rental market.

Mr Pirrottina said as an investment, boarding houses were performing well during COVID-19 because demand for affordable accommodation was increasing as tenants look to downsize and save on dayto-day living costs.

“While the property market has been challenging in certain sectors since Coronavirus restrictions began in March, boarding houses continue to remain a strong investment class, with strong buyer interest particularly from a development perspective.

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“Anecdotally, occupancy in these assets has risen since the pandemic began in Australia with demand to live in this type of accommodation growing as the economic fallout of COVID-19 has been felt.

“It is significantly cheaper to rent a room in a boarding house than a one-bedroom apartment, and this type of living is broadening its appeal to young professionals, students and downsizers.”

Mr Carigliano said as an investment class, boarding houses were a niche sector but buyer appetite had grown over the past three years in New South Wales, when planning laws were amended to allow for greater development of these assets.

“As off the plan apartment sales have slowed, investors have looked to alternative and less risky investments such as boarding houses,” he said.

“These assets provide buyers – who are often developers – with passive income and yields in the vicinity of 5% to 6.5% compared to a 3% to 4% yields for blocks of residential units.

“The best performing assets are located in suburban Sydney markets, close to infrastructure including hospitals, public transport and universities.

“Boarding houses can also be sold in one line as they are not strata-titled like units, which means investors can trade out of the asset faster if desired.”

For further information, please contact:

Philippa Giles – Associate Director, PR & Communications Australia, Knight Frank
[email protected] +61 402 828 434
Vanessa De Groot – Director, De Groot Communications
[email protected] +61 410 460211

Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London,
Knight Frank has more than 18,000 people operating from 523 offices across 60 territories. The Group
advises clients ranging from individual owners and buyers to major developers, investors and
corporate tenants. For further information about the Company, please visit