Architect and developer Oliver Steele has sold his Passive House apartment development in Redfern to a private investor who will run the premises as an Airbnb under the Hometime property management brand.
The 11 recently completed units, certified under the highly sustainable airtight design standards, were sold in one line for $10 million.
Mr Steele says he understands the purchase was mainly a yield play with the buyer intending to continue leasing the units for a total yearly return of 4 per cent a year on purchase price.
The apartments are currently renting for between $250 and $200 a night with overall occupancy at around 85 per cent.
A huge benefit, he says, is the low running costs with the solar array on the roof (and no gas) producing 20 per cent more energy than needed.
“The electricity bills for the first three months was $860 which was mostly for connection fees and services,” he said.
The buyer is private investor Anthony Maple-Brown who is understood to have recently sold a technology company.
Mr Steele says the project probably cost 10-15 per cent more than a regular project and that he made less money out of the venture than he might have if the apartments were not to Passive House standard.
“Put that down to being the guinea pig of Passive House and reinventing every wheel, panel and cog on the vehicle.”
Selling agent Paul Langsam of Raine & Horne Double Bay, who handled the sale in conjunction with colleague Peter Starr from his office and David Hickey of Savills Australia, said it was an exciting opportunity to market.
He said he “absolutely” pushed the green credentials and tried to sell it on that basis.
“I was very excited to have the opportunity,” Mr Langsam said.
“You sell a lot of things along the way but you don’t often get a crack at something so dramatically different.
“Even though it cost more to build Oliver was so proud of the work, and he was trying to build something where people would be proud of the product.”
Mr Langsam said some of the buyers also responded to the green credentials.
“We had a lot of interest in the block because people do like to secure blocks of apartments but in the end we felt that the eventual buyer would have to see the long term benefits of sustainability and perhaps have a conscious buy because there are probably cheaper blocks of 11 apartments. It came down to what it offers.
“Five or six people submitted expressions of interest and three were particularly keen because of the green components.”
He doubted the property was “a money spinner” for the developer, and said the premium for extra glazing and extra concrete to separate internal and external walls, was significant.
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Mr Steele says he intends to take a break from the “60-80” hour weeks he put in to develop the project and spend more time with his family, but already there are irons in the fire for more work.
He’s recently sold a site in Rose Bay that he initially intended to develop with more Passive House units, for around $3.65 million, and is currently helping the buyer achieve a construction approval for six units already development approved.
He’s also started on a new project in the inner west suburb of Stanmore for a new generation boarding house, complete with services such as internet, cleaning and weekly linen service and even food.
The development will not be a fully Passive House project but it will have green credentials such as “high performance glazing, good insulation, good air sealing; and hopefully heat recovery ventilation (seen in Passive House design).
Other potential buyers included wealthy families “seeking a yield bearing investment in a climate of very low interest rates” alongside a number of similar investment funds and boutique hoteliers.