Sydney studios

[Lotana]

Studio units in Sydney give higher rental returns than any other units. The reason for this is lower LVR available, which reduce the number of potential buyers, which in turn has a downward pressure on the price.

I think in today’s market studios represent a good alternative to other types of inner-city property, however I was not able to find any statistics on capital growth for this sector of the market.

Would anybody have this information available or perhaps just some personal observations?

Also, what factors affect the price for studios? I understand the total area is most important. Another factor must be the unit's condition. What about things like parking, orientation (North is best?), views, floor? How liquid are they in average market?


Thanks and regards,

Lotana

 

[Lotana]

Guys, I'm still hoping to get some feedback. PaulZ, are you still browsing the forum?

Lotana

 

[bbruham]

Try living in one and you'll see what a disaster they are if you're not super tidy.
I imagine that the only people to rent these things are people who can't afford a real unit. One bedder or two bedders.
They are usually just a large room.
Not for me.

BBruham.

 

[Crystal]

Hi Lotana,
I live in (rent) a studio and love it! I've shared with some weird, crazy, lazy and broke people and I used to live in my bedroom to keep away from them. Since moving to the studio, I don't have to worry about sharing accommodation with crazy people and I have the most enormous bedroom with own kitchen and bathroom.
I'm in a fairly old block which is fabulous because the walls are thick - so I don't hear my neighbours at all. My Northerly aspect is just tremendous but you'd be surprised how many people don't understand the concept! Some people say "Don't know why my bedroom is so hot or my unit is so cold" and I say "is it west/south facing" and they say "yes, why do you ask?"
I also have a parking space - it's important to me because restricted parking on street.
A friend of mine was just burgled on the first floor of her building - I admit I feel safer from criminals higher up.
Just my opinion,
Cheers,
Crystal

 

[JoannaK]

Hi Lotana,

This is my personal opinion only, and not based on anything in particular, but I would say that studios and 1brs represent fantastic investments if purchased at the right price.

I know when I was renting it was virtually impossible for me to find something a single person can live in.

There are plenty of studios around Potts Point, Eliz Bay, the X and the values have continued to go up steadily. I was looking at studios about a year ago in those areas and spoke to a number of ppl who all said that rental demand is very good, however, high turnover of tenants can be a problem sometimes. I went to several open houses and they were always full with other interested purchasers, so they do appear to be a popular investment.

The only catch would be finance. St george lends on a studio but other banks won't lend on a property less than 50 sqm.

Also, alot of them won't have parking (particularly in the city areas).

Try finding a studio in the southern suburbs (St George and Sutherland Shire) - impossible - they do not exist here. I'm led to believe that the Inner west has a good studio market.

 

[Lotana]

Hi Joanna,

From the tenant's point of view, how important is the total floor area? If a studio is well positioned, right in the middle of cafe/boutique strip, has harbour views, is facing north but is really small (20m), is it going to be a showstopper?

Cheers,

Lotana

 

[Kevmeister]

I know some investors seem to live by the adage "but you don't have to live in it", but I think putting yourself in someone else's shoes and trying to contemplate what it might be like living in something that small. Note that I'm merely making an observation, not speaking from experience.

20sq m to me is a motel room. That's 4 x 5 metres. Actually, most decent motel rooms would be bigger in my opinion.

A queen-size bed occupies close to 4sq metres. Lots of single people seem to still love having double/queen beds. A couch occupies roughly 2sq metres. You get the picture. When you start thinking about cupboards, cooking facilities, shower, bath (highly unlikely), laundry (???), TV, maybe a desk for a computer, maybe somewhere for a stereo, etc, that ain't much room.

 

[Lotana]

Some suburbs in th ecity fringe have more developed studio market than the others. Woo-loo has been mentioned, Pots Point, X, but what is it like at Bondi Junction and Paddington? There are some studios there but not that many.

Cheers,

Lotana

 

[WillG]

Would a furnished 1 bedder be a viable proposition ?.

Furnished 1 bedders may attract long term corporate leases similar to serviced appartments.

 

[NigelW]

Originally posted by Kevmeister
Lots of single people seem to still love having double/queen beds.

c'mon Kev. why do you think that might be hmmm?

 

[Lotana]

C'mon guys, I don't want my question to be burried by off-topic messages. As for the bed size, everybody likes a bigger bed and bigger everything else, but it comes at a price. A 20 sqm unit is for 1 person, not 2, unless there is a built-in folding double bed. I am trying to assess how many people would prefer 1 great location + views but smaller studio as opposed to not as great location, no views, but larger floor area for the same weekly rent. I tend to think that the location is more important, but I may be wrong.

Cheers,

Lotana

 

[Kevmeister]

I guess my point is that living alone does not mean "living in isolation". Whether that means your boyfriend/girlfriend sleeps at your studio occasionally, or whether you have someone come over occasionally to watch a DVD/video together or whatever. Point is, people who live alone probably still have, and like, visitors from time to time.

And if the size of studio is so restrictive that you don't even want to (or can't) invite anyone around, then does that actually change the demographic you are targeting? And if that changes the demographic you are targeting, how important remains the location and outlook.

For example, shy computer geek single guy, no girlfriends, few mates. Sure, he might rent your apartment - he ain't gonna be needing heaps of space anyway, perhaps. But is this the guy that's gonna want to be in the "latte strip"? (He might still appreciate the views, nonetheless).

Can't say I understand Generation X that well. You probably need a Generation X'er to tell you what they're after. And Generation X'er are unlikely to be on this forum.

 

[JoannaK]

Originally posted by Lotana
Hi Joanna,

From the tenant's point of view, how important is the total floor area? If a studio is well positioned, right in the middle of cafe/boutique strip, has harbour views, is facing north but is really small (20m), is it going to be a showstopper?

Cheers,

Lotana

Hi Lotana,

Last year we built a small block of 8 apartments in Camperdown for a client and it contained 3 studio apartments. The studios were the first to sell and the quickest to lease.

If someone enquires about a studio apartment one would presume that they know how big (or small) a studio apartment is, therefore, size wouldn't be the ultimate concern for that target market.

I think 20sqm is a bit too small in my honest opinion, but you can do some really creative things these days with hideaway beds and wardrobes that double as a room divider. The ones we built were 40sqm.

For me, location would be paramount, views not so important. A studio is small, so I wouldn't want to be spending too much time there, so views really would be secondary.

Why don't you rent it as short term accomodation (like a serviced apartment), and approach all the travel agents and real estate agents and place ads in the SMH under serviced apartments. It would lease in a flash, you'd get better rental return and over time build a loyal clientelle that would fill it up throughout the year. The downside of course is beginning this process where vacancy can be volitile.

Hope this helps.

 

[Lotana]

Joanna,

Thank you very much, this is encouraging.

Cheers,
Lotana

 

[JoannaK]

YOu're most welcome.

If you decide on the short stay strategy let me know - i've taken this road before and it was very successful.

 

[bbruham]

JoannaK said it all, the turn over is large.
That's because the tenants are trying to escape from them. Soon as they earn a "quid", they're off.
One bedroom units with a decent living area is the way to go.
Peasents live in studios.Reminds me of those movies, of the depression days.

bbruham.

 

[Crystal]

Hi Lotana,

"I am trying to assess how many people would prefer 1 great location + views but smaller studio as opposed to not as great location, no views, but larger floor area for the same weekly rent."

For the same rent, I'd take the larger apartment without views.
Busy single people don't have time to look at the view - it's a place to wash yourself and sleep.

Cheers,
Crystal

 

[Jamie]

Hi Lotana

First up, I agree with Crystal... I think if studios are suited to the young professional, then I would always opt for extra space over seldom used views.

Im also wondering where the 20sqm came from. Is that an actual studio youve seen, or just an example? I have personally never seen a studio that small... the last I looked at was similar to Kristine's (42sqm), and they had problems unloading it because of the finance difficulties.

Ive also lived (rented) a studio on my own and loved it. Easy to clean, good excuse not to invite people over... but dont discount the double/queen size bed The whole point of living alone in a prestige studio is that you can show it to someone special (you want tenants to have pride in your investment dont you?)

Seriously though, if the studio is super small a purchaser may not get finance for it, which means that, if you ever need to, unloading it may become a problem for future owners.

I guess it all depends on the property itself and your own situation... but in some circumstances, I think the right studio could fit nicely into a portfolio

Jamie.

PS You could always put mirrors on the roof to double the floor space - just have to watch out for naked the skydiver in the mornings )