20 Bayswater Road, Potts Point
Spotting the gem in an area undergoing transformation
The Bayswater Terraces were bought following a failed expression-of-interest campaign. The four heritage-listed Victorian terraces housed mainly nightclubs and associated tenants. The introduction of the lockout laws in 2014 had a devastating effect on the Kings Cross area and its properties. Buyers fell into two camps; those who wanted long term income (and this was now uncertain), and those wanted the terraces vacant so they could initiate a residential redevelopment. This was unlikely as one tenant, The World Bar, had a long-term lease.
ECG took the view that either strategy would be profitable if executed properly.
The projected returns were 6% to 8% over the term of the investment, and a seven-year fund was established to carry out the strategy.
At settlement, the terraces presented terribly. They were night-time economy buildings, and the primary challenge was to turn them into daytime economy buildings.
Our focus was on restoring dignity to these four beautiful Victorian terraces. The failed nightclub was converted into an F45 gym, and the process began from the roof down to refurbish the terraces. Step one was to make them waterproof and fix the roof. We then went through each terrace, refurbished all the common areas and stripped out the poor presenting office suites.
Following these renovations, the terraces leased up easily, with the result that income on the office suites doubled. As each terrace was separately titled, we concurrently engaged Antoniades Architects to develop concept plans to convert the properties back to four lavish residential terraces. This was an unlikely outcome because of the heritage restrictions, but it opened the terraces up to a broader buyer pool and assisted in the outstanding sale result.