Glebe's former Roxbury Hotel fetches $5.5 million, tipped for student accommodation

The two-storey pub and adjoining four-bedroom Victorian terrace at 180 and 182 St Johns Road comes with development approval for 25 self-contained student accommodation units and ground-floor retail.

The approved plans for the corner block of 494 square metres had originally included a watering hole on the ground floor, but Ray White Commercial selling agent Kristian Morris said the new owners are not interested in running the pub.

“These guys are not looking at it (the pub component), their primary focus is the activation of the DA from a student accommodation point of view,” he said, adding that the ground floor still has to be a commercial operation.

“Because the Roxbury is located within walking distance from the Forest Lodge Hotel and The Nags Head, the new buyers thought they would reactivate the ground floor retail space with some other use.”

The adjoining four-bedroom Victorian terrace was included in the sale. Photo: Supplied

While the vendor did have a go at running the hotel at one point, he is a private local investor with multiple commercial properties.

The new owners are local private investors with experience in the student accommodation sector, operating mainly in the eastern suburbs of Sydney.

“Because of the lack of stock that’s coming up within that market, they decided to widen their search and to maybe be in the city fringe inner-west market,” said Mr Morris, who sold the property with Justin Rose.

And it was the development approval which was the main appeal for the buyers.

“Trying to get a DA approval on something could take anything from 12 to 24 months. These people had the funds, they were ready to go, and they wanted to leverage the previous hard work of the DA,” Mr Morris said.

The new owners were competing against three other serious buyers in a campaign that attracted more than 80 inquiries.

“During the sales campaign, we also had inquiry from prospective buyers who were interested in occupying a site with a future redevelopment exit strategy,” Mr Morris said.

Industry players have been on a pub buying spree, pushing up prices while looking for hotel sites with development potential, a recent CBRE report on Australian pub property trends found.

“Demand within the sector maintained its high levels during the second half of 2017 and is showing no signs of fading,” CBRE Hotels research manager Ben Martin-Henry said.

“2018 is likely to see further tightening of yields along the eastern states, as the market reaches the peak of its current cycle.”

Mr Morris noted that the popularity of student accommodation development has been ramping up in recent months.

“As the residential off-the-plan sales market softens, there are a lot more inquiries around student accommodation play,” he said, adding that the owner received uplift in floor space ratio thanks to this use.

The deal sold for $6395 a square metre, based on 860 square metres of gross floor space, and a rate of $222,000 per room for 25 rooms, Mr Rose said.