Melbourne backpackers' hostel building the Elephant with faded Edwardian charm sells to owner-operator
The Edwardian-era building that houses the Elephant Backpacker, across the road from Flinders Street Station, has been sold to an owner-operator for a price in excess of $6.6 million plus GST.
The freehold building, formerly called Ackmans Building, was built in 1910, around the same time as Flinders Street Station (1909) was constructed.
Heritage website walkingmelbourne.com.au describes the building as a “classically inspired Edwardian building featuring Federation free-style motifs”.
It most likely bears the name of former pawnbroker-turned-retailer Henry Ackman, who ran a department store called Ackman's Monster Emporium on Smith Street in Fitzroy.
Located on the corner with Degraves Street, the property incorporates the ground floor entrance foyer and basement area together with three upper levels that are serviced by a single lift and stairwells.
The sale price included the business itself.
In May last year a historic 1913-built Art Nouveau backpackers' hostel on the corner of Flinders Street and Spencer Street sold for $10.75 million with an expected yield of more than 8%.The new owner of Elephant Backpackers operates a hostel in the Melbourne CBD and plans to continue operating the 240-bed backpacker hostel.
It currently generates an annual cashflow from accommodation and related services afforded to backpackers and travellers of around $1.4 million.
The building extends 45.6 metres along the eastern side of Degraves Street, the popular laneway and eating strip, which runs all the way to Flinders Lane.
It includes part ground floor and three upper floors measuring 2,141 square metres on a site measuring 584 square metres.
The sale does not include the shopfronts that run the length of the hostel that extends down Degraves Street, which are separately titled.
It was sold via an expressions of interest campaign by Kliger Wood agents Grant McKenzie and Russell Meerkin, who said it had attracted a significant number of offers.
“The vendors of the freehold and business are based interstate so the accommodation business has been operated efficiently prior to the sale under management,” says McKenzie
“The location of the building is the key factor, as it abuts Degraves Street probably the city’s most dynamic laneway and cafe precinct.
“In addition, the building itself is relatively under-developed.
“The basement for instance is used only as a resident communal kitchen for backpackers, as a laundry facility and break-out area.
“It could in future be utilised as a bar or restaurant and could also provide direct pedestrian access under Flinders Street to the Station and on across the River to Southbank.
“Two of the upper levels provide older style accommodation with a mix of single and double rooms, with dormitories offering four to six bed accommodation," he says.
“The third level has been extensively renovated as 18 flash pack rooms, 11 with en suites inclusive of shower, basin and toilet with three eight-bed dormitories and another two six-bedroom dormitories.
Subject to the owner obtaining the necessary permits and planning permission, the building has the potential to have additional floors added.
