Sydney investors snap up entire apartment blocks for quick cash flow

Investors are increasingly snapping up entire apartment blocks, drawn by the promise of quick cash flow and the attraction of long-term generational investment.

Eight blocks across Sydney have sold for more than $65 million in just four weeks, according to Ray White Double Bay, underscoring the trend.

Some of the notable sales included 10 Lancaster Road, Dover Heights, where four two-bedroom apartments fetched $5.51 million, and 12 Dartbrook Road, Auburn, where a block of eight two-bedroom units sold for $4.9 million.

In Annandale, a three-unit block at 131 Johnston Street sold for $2.2 million, which is under the suburb’s median house price of $2,344,500, according to Domain data.

Lead agent Melanie Lahoud says uncertainty clouding other types of investments is pushing buyers towards the long- and short-term stability of multi-unit properties.

“It’s a long-term strategy,” she says. “But we are finding they’re getting better returns than if they were to buy houses and rent them out.”

Lahoud says buyers are attracted to the greater control that comes with owning an entire block rather than individual strata units in different buildings, as well as the steady stream of income it provides. 

“If one unit is vacant, the other units still have income coming in,” she says. “Whereas, with a house, if it’s vacant or there are repairs happening, you’ve only got one source of income.”

The recent uptick in demand is partly the result of supply constraints. Smaller, whole-block developments are no longer being built to the same scale, making existing stock scarce. 

“They’re not building small blocks that people can acquire in one line anymore,” Lahoud says. “So there are more people looking for these types of assets.”

Many of the properties recently sold by Lahoud and her team had been tightly held for decades, with some returning to the market for the first time in 35 years. She says these listings are largely driven by changing personal circumstances rather than weakening confidence.

“[Vendors] are coming to an age where they are getting old and need to give money out,” she says. “They want to give money to their children. The buildings may also need some work, so they’re looking at offloading the assets.”

Smaller blocks, in particular, are attracting heightened competition and often command a per-unit premium, which Lahoud says is due to a broader pool of buyers.

“Blocks of four tend to perform better on a per-unit basis than blocks of six, eight or 12,” Lahoud says. “Smaller blocks can get residential lending if people are borrowing money, and also, there are more people who can spend up to, say, $4 million or $5 million than there are $10 million.”

Once buyers get a taste of the security and fast-cash returns of buying entire blocks, they often want to secure more, which sustains momentum.

“After buying one, they’re ready for their next one not long after,” Lahoud says.

They also offer scope for potential. In Melbourne, a former 1970s motel was recently converted into a residential block, generating an annual rental yield of $483,000.

Still, Lahoud notes that most buyers take a longer view. “The majority are long-term holders who pass the blocks down to their children,” she says. 

Blocks of units for sale

SOLD - $7,800,000

13 Fletcher Street, Tamarama NSW 2026

10

6

7

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For Sale

21 Botany Street, Bondi Junction NSW 2022

14

7

5

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18-22 Dalmar Street, Croydon NSW 2132

8

4

4

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