New generation boarding house in Summer Hill sells for $11.25 million off market

The new generation boarding house replaced this traditional two storey complex with nine bedrooms, shared living and dining spaces and a large car park off a side drive.

A new generation boarding house in Sydney’s inner west Summer Hill sold for $11.25 million following an off-market campaign concluded in February.

The four-storey complex at 35 Gower Street (pictured top and bottom) contains 25 self contained units, all of which are leased.

It was developed on a 702 square metre plot which sold for $2.46 million in mid-2014 when it contained an ‘old generation’ two level boarding house with nine bedrooms (images, right).

At that time, the site, seven kilometres from the CBD, was being marketed for its potential to be replaced with a childcare centre or medium density residential project.

Instead, according to JLL’s Gordon McFadyen who sold 35 Gower Street this time around – the high quality redevelopment it made way for “is arguably one of the finest examples of new generation boarding houses in Sydney”.

New generation boarding houses encouraged in Sydney’s low density suburbs since 2009

Created to, in theory, make housing stock, particularly in desirable inner-city locations more affordable – the NSW government introduced provisions and incentives in July, 2009, allowing builders to construct and lease ‘new generation boarding houses’ – effectively blocks of flats with particularly small suites sometimes called microapartments.

These self-contained studios can be sized from 10 sqm while the larger units can measure about 25 sqm (this compares with traditional one-bedroom flats which are usually between 40-60 sqm).

Private investors and not-for-profit housing organisations can develop new generation boarding houses which are typically offered furnished.

In Sydney, microapartments can be rented from over $200 per week inclusive of utilities. Many, however, are priced at more than twice this.

Lease terms are usually about three months.

The dwellings have found favour with amongst others, professionals, retirees and people requiring temporary accommodation (like divorcees).

They have also faced criticism for being overcrowded, noisy and increasing vehicle traffic (usually these developments contain little car parking, though last year NSW planning minister Anthony Roberts proposed lifting the allowance from 0.2 spaces per room to 0.5).

Some also argue new generation boarding houses aren’t delivering residents affordability as promised.

Annandale, Greenacre, Maroubra and Paddington are some of the low-density Sydney suburbs where microapartments have been constructed this past decade.

Several permit-ready sites hit the market last year in the city. One in inner south west Erskineville with permission to be replaced with a three-storey complex containing 18 dwellings sold at auction for $3 million following a campaign where nearly 300 prospective purchasers inquired.

Singapore based co-living operator Hmlet is one of Sydney’s larger suppliers of new age boarding houses.

According to NSW’s Department of Planning and Environment, and including old generation product, there were 1062 boarding house facilities in the state as of last May.

A self contained new generation boarding house suite at 35 Gower Street, Summer Hill.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco