What it costs to develop a co-living or boarding house in Australia

A new co-living or boarding house room costs about $95,000 to $180,000 to build in Australia in 2026, or roughly $2,600 to $3,900 per square metre, before land and furniture. A 26-room western Sydney scheme lands near $4.4 million all-in, renting at $330 a room a week for a 4.9% yield on cost.

Co-living and boarding houses are the cheapest new bedroom a developer can put on a site, and the most operationally demanding to run once it is built. You are not selling a net lease to an investor the way a childcare centre sells; you are running furnished, all-inclusive rooms on short tenancies, so the build cost, the room-size rules and the valuation method are all different from standard residential or commercial development. The figures below come from 2026 builder rate cards, Knight Frank's co-living transaction data, Consumer Affairs Victoria, the NSW Housing SEPP and specialist co-living lenders, with a worked example for a 26-room scheme.

What a co-living or boarding house room costs to build

Builders quote co-living and boarding house rooms two ways: a per-room rate that already includes an allocated share of the kitchen, laundry, lounge, corridors and site works, and a per square metre rate on gross floor area. A Sydney builder's 2026 rate card for a medium to high spec room (private ensuite, allocated shared facilities) breaks down as $35,000 to $50,000 for structure and envelope, $25,000 to $40,000 for the internal fit-out, $10,000 to $18,000 for the ensuite, $8,000 to $15,000 for the shared facilities allocation and $10,000 to $20,000 for site works, for a total of $93,000 to $153,000 a room before approvals. A separate builder survey of Western Sydney projects puts the all-in room rate, including common areas, at $80,000 to $130,000, with a 10-room house landing at $800,000 to $1,300,000 and a 20-room scheme at $1,600,000 to $2,600,000, before land, demolition, approvals, external works and furniture. On a floor area basis, mid-spec new builds run $2,600 to $3,200 per square metre of gross floor area and premium spec $3,200 to $3,900. Converting an existing house instead of building new is cheaper again: a compliant 5-room conversion of a standard 4-bedroom house in Melbourne runs $80,000 to $150,000 total, not per room, because you are reusing the shell, kitchen and most of the plumbing. For general apartment and house build rates by city, see construction cost per square metre in Australia.

Room sizes and communal space: the rules differ by state

There is no single national standard. NSW regulates co-living and boarding houses through the Housing SEPP: a co-living room must be at least 12 square metres for a single occupant or 16 square metres for a couple, excluding any ensuite or kitchenette, and both formats need communal indoor and outdoor space and a manager operating under a plan of management. Boarding houses under the same instrument are a form of affordable housing, and new boarding rooms delivered under the SEPP's bonus provisions must be managed by a registered community housing provider for at least 15 years from first occupation, with rent set at a discount of 20% to 25% below market rent, or 25% to 30% of the household's before-tax income, whichever the Ministerial Guidelines direct. Co-living carries no such affordability condition, which is why most private developers now build under the co-living pathway rather than the boarding house pathway.

Victoria regulates through the Residential Tenancies (Rooming House Standards) Regulations: a minimum room size of 7.5 square metres, at least one toilet per 10 residents and at least one bath or shower with a washbasin per 10 residents, plus lighting, ventilation and floor covering standards. Queensland has no equivalent state-set minimum room size. Rooming accommodation there is controlled locally through council planning codes, such as Brisbane's rooming accommodation code, which allows up to 5 guests as a lower-impact, code-assessable use in residential zones before a development needs impact assessment, and the state's minimum housing standards under the Residential Tenancies and Rooming Accommodation Act are qualitative (structural soundness, working plumbing, privacy coverings) rather than a fixed square metre figure.

Fit-out, operating costs and what rooms actually rent for

Furniture and loose fit-out sit outside the build cost in every builder quote surveyed. Budget $6,000 to $9,000 a room for a bed, desk, storage, soft furnishings and a share of communal kitchen white goods in a purpose-built scheme. Because rent is almost always quoted all-inclusive (utilities, wifi, cleaning of common areas), the landlord carries costs a standard residential landlord does not: expect utilities of $100 to $200 a room a week, property management fees of 8% to 15% of gross rent against 5% to 7% for a standard tenancy, insurance, higher turnover cleaning and a maintenance allowance. Typical occupancy across a stabilised scheme runs 90% to 95%, with one room in five vacant at any time treated as normal in the sector.

Rent per room varies widely by city and format. Knight Frank's national co-living data puts inner Sydney all-inclusive rent at $675 a week against $730 to $880 for a comparable private apartment. Western Sydney purpose-built rooms run $280 to $380 a week. Melbourne sits lower: converted rooming house rooms average $250 to $320 a week, and shared accommodation broadly runs $300 to $550. National supply of purpose-built co-living has passed 10,000 units either completed, under construction or approved, and Sydney holds more than 90% of completed stock; the average completed scheme has 37 rooms, rising to 60 under construction, 78 approved and 130 at the proposal stage, so the sector is scaling up fast from small boarding-house-style buildings toward much larger purpose-built blocks.

What completed co-living and rooming houses sell for: yields and site prices

Two different markets trade here and they price very differently. Development sites with an approval already in hand trade on a rate per approved room. Knight Frank's 2024 Sydney figures show a 480 square metre site at Ryde with a 25-room co-living approval selling for $2,810,000, or $112,400 a key, and a 787 square metre Marrickville site with a 35-studio approval selling for $4,850,000, or $138,000 a key, the highest recorded that year. Total co-living site sales in Sydney ran to $50 million across 2024 through Knight Frank alone.

Completed, tenanted assets trade on a capitalised income basis, and the cap rate applied depends heavily on scale and covenant. JLL reports globally recorded institutional co-living yields of 4.50% to 5.50%, a band that applies to large, professionally operated portfolios with an established brand operator, similar to the compressed yields childcare and build-to-rent assets attract. Smaller, standalone boarding-house-scale assets sold to private investors are priced far wider: buyer's agent research on Melbourne rooming house conversions puts the realistic net yield on total deployed capital at 5.5% to 6.5% once operating costs and vacancy are stripped out of the 6.94% median gross yield recorded across 48 conversions, and boarding house buyer's agents in Brisbane market smaller rooming houses on 8% or higher gross yields, reflecting the thinner buyer pool and higher perceived risk of a single, owner-managed asset against an institutional portfolio.

Worked example: a 26-room co-living scheme in western Sydney

The figures below are indicative and assembled from the sources above: a 1,100 square metre residential-zoned site with an existing dwelling in Sydney's western growth corridor, a purpose-built 26-room co-living scheme approved under the Housing SEPP co-living pathway (no affordability condition), rooms averaging $95,000 to build, and rent of $330 a room a week. All costs are ex GST with the developer registered and claiming input credits.

That is about $169,900 per room all-in, well above the $80,000 to $180,000 build-only range quoted earlier because it carries land, finance and full soft costs the per-room builder rate excludes. At full rent of $446,160 a year and 93% occupancy, gross income is about $415,000. Running costs (management at 10% of gross, all-inclusive utilities, insurance, rates, maintenance, cleaning and turnover costs) typically run close to half of gross income for a furnished, all-inclusive scheme, roughly $199,200 here, leaving net operating income of about $215,800, a 4.9% yield on total development cost. Capitalised at the wider 6.5% cap rate the private-investor market applies to a standalone 26-room asset, that income values the completed scheme at about $3,320,000, below the $4,418,000 it cost to build. Capitalised at the 5.0% institutional band reported for large, brand-operated portfolios, the same income is worth $4,316,000, close to cost. That gap is the whole story of this asset class: unlike a childcare centre or a build-to-rent tower, a 20 to 30 room co-living scheme rarely has an institutional buyer waiting, so most operators build to hold and refinance on the stabilised income rather than build to sell, and the achievable cap rate on exit is the single biggest swing factor in the deal.

How a co-living or boarding house development is funded

Lenders treat co-living as a specialised asset, not standard residential or standard commercial property, and the line that matters most is room count. Specialist lenders generally assess a co-living or rooming house of up to six rooms as a residential-style application, with gearing to 80% LVR against the property and the rental income used in serviceability. Once a scheme reaches seven to twelve or more rooms it is assessed as commercial, priced with a rate loading, and valued on a commercial basis that weighs both the bricks and the rental income rather than a standard comparable-sales valuation. Most major banks have limited appetite for the asset class at any scale, so the market runs through specialist non-bank and private lenders who understand the income model and the shorter, furnished tenancies.

For construction, non-bank lenders commonly fund 65% to 75% of total development cost or up to 70% of gross realisation value, at roughly 8.00% to 11.95% p.a., with an establishment fee typically 1% to 3% and interest capitalised through the build. Private first mortgage lenders can reach further, up to 80% of cost in the right location, at a higher price, and are often the only realistic option for a boarding house carrying the Housing SEPP affordable housing condition, since that condition narrows the buyer and refinance pool. Once the scheme is complete and income has stabilised for a rental history, typically three to six months, the facility is refinanced to a term loan against the commercial income valuation, at gearing that reflects the specialised-use classification banks apply, generally 60% to 70% rather than the 80% a standard residential term loan allows. See construction finance for how the build itself is funded and commercial property finance for the completed-asset term loan. Private lending is typically business purpose and not consumer regulated, and every facility is subject to lender assessment. To get a number from Ventas, send the site and approval status (co-living or boarding house pathway), the room count and builder's quote or QS estimate, projected rent per room, your equity, and any prior projects. See development finance for how Ventas structures the whole stack.

This is general information only and not financial, credit, or tax advice. Figures are indicative market data from the sources listed, not Ventas offers, and move with the market. Consider your own circumstances and speak to a professional. All finance is subject to lender assessment and approval.

This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.