Rub a dub-dub… how much for that tub?!
Many apartment buyers insist on finding a place with an ensuite, convinced that it’s a key to both “liveability” and that holy grail of real estate, maximum capital gain. There are plenty of advantages in having a second bathroom and in a 3 bedroom apartment we’d suggest it’s pretty much a requirement. In shared 2 bedroom households the idea of a bedroom and adjacent bathroom for each occupant is popular, and makes living with a cookie-thieving, loud music playing flatmate that bit more tolerable. But with so many couple and lone person households we wonder whether the extra cost of that second bathroom really ever pays for itself?
In rental returns the answer is – probably not. As examples we’ve looked at two inner city apartment buildings, one in the CBD and one in Spring Hill, where there are 2 bedroom apartments of very similar size, view and design. In each case one has an ensuite and the other doesn’t. And the rents? In Spring Hill it’s $420 with one bathroom and $450 right next door with a second bathroom. The CBD tower achieves $560 for a 2 bed, 1 bath apartment and $600 for its ensuited neighbour.
Any new apartment in Brisbane’s inner city now needs to be priced at around $7000 per square metre to be viable for development, and more of course in prime locations. So for an 8m2 ensuite (which is one of the most expensive areas to build) there needs to be a price premium of at least $60,000 to justify inclusion in the apartment. To earn a 5% gross return to an investor that’s $57 per week extra rent. Possible but not likely.
And how about price? In one CBD building we’ve seen two apartments, side by side, sell over the past month – one for $490,000, the other for $620,000. The difference? Around 15m2 extra space including an ensuite! In the same way buyers still flock to big backyards in the ‘burbs, many inner city apartment purchasers remain determined to buy with an ensuite, regardless of whether they actually need it. There’s a premium priced into the market that we believe mightn’t be retained in the future as affordability – for both buyers and tenants – causes a re-think on surplus bathrooms.
And with future water restrictions we probably won’t be able to use the shower anyway!
Do apartments need a 2nd bathroom? Tell us what you think!