Extended stays Australia’s fastest growing market

Extended accommodation is emerging as one of Australia’s fastest growing property sectors, providing an alternative to investors struggling to make a decent return in the traditional rental market.

Until now, real estate has largely been the domain of corporate investors but Extended Stay Australasia (ESA) managing director Damian Gallace said rising average house prices were making extended stay accommodation attractive to mum and dad investors.

Mr Gallace said small investors could buy extended businesses for the same price as most residential properties.

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The extended living space looks like apartment buildings when built.

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Osborne, soon to be home to the $30b state-of-the-art shipyard for AUKUS submarines, is among the potential sites for future accommodation. Photo: NCA NewsWire / Brenton Edwards.

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Once built, buildings such as apartments were leased back to ESA, providing guaranteed rental returns without any ongoing maintenance or building management costs, Mr Gallace said.

Even if the property sits empty for a long time, investors still get a rental return, he said.

“This gives investors the certainty of income and the certainty that their property is being looked after by someone who is as interested in investing as they are,” said Mr Gallace.

“You don’t have to deal with choosing a place to live and you don’t have to deal with a rental deadline (and learn new tenants).

“In a five-year rental period, the place you rent may change five times because of five different tenants.

“With our residence, (returns) have probably increased every year of those five years.”

Last year, a Future Market Insights report predicted that Australia’s expansive residential property market would grow to $2.3b over the next ten years, representing a compound annual growth rate of five per cent.

The expansion will be driven by changing work patterns, the report said, as remote work and hybrid systems become more common.

Unlike traditional vacation homes, the extended accommodations are purpose-built for extended stays by corporate and government employees, with full kitchens, bathrooms and laundry, as well as high-speed business-grade Wi-Fi and dedicated workspaces.

Mr. Gallace said that the demand for long-term residential property is greater than the demand.

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Whyalla, where Magnetite’s current expansion plan is set to create hundreds of jobs, is also a potential residential area. Photo: Brett Hartwig.

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Real Estate Institute of South Australia CEO Andrea Heading. Photo: Provided.

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Osborne, soon to be home to the $30b state-of-the-art shipyard for AUKUS submarines, and Whyalla, where Magnetite’s current expansion plan is set to create hundreds of jobs, are among the potential future sites.

The Eyre Peninsula was another potential destination if the state government’s proposed $5b Northern Water desalination plant.

Further, projects in Far North Queensland, including the Mourilyan Silica Sands mine, near Innisfail, could also benefit from extended accommodation.

Mr Gallace said companies prefer to use extended staff accommodation rather than traditional recruitment options due to the consistency and quality of accommodation and the lack of fixed recruitment periods.

Real Estate Institute of South Australia chief executive Andrea Heading said the supply of properties could help solve the housing shortage in areas that rely on FIFO.

workers or in places like Kangaroo Island, which suffers from a shortage of seasonal workers’ housing during the holidays.

“With more people coming (to South Australia), saying (to work) in Defense and AUKUS in particular, there will be a huge demand for this,” Ms Heading said.

However, he said that finding a place to build any kind of house or place to live can be difficult.

– by Lauren Ahwan