Interesting news in this article. Don’t miss out, this market was the first to flounder but it is also the first to recover.
4:00AM Sunday May 24, 2009
By Jane Phare
Older investors are helping fuel a resurgence in the inner-city Auckland apartment market.
The sector is bouncing back after two years suffering from leaky building fears, over-supply and banks refusing to lend the same percentages on “shoebox” apartments as other properties.
Last year’s Auckland City Council valuations showed inner-city values had dropped by 3 per cent, compared with an average increase of 12 per cent.
But property experts said activity in the market had risen by as much as 50 per cent in recent months.
They attribute the improvement to lower interest rates, first-time buyers choosing apartments instead of expensive houses and the lure of better returns than the 3 or 4 per cent offered by banks.
That’s brought new investors into the market, including older people. Bayleys is targeting “mature professionals” and family investors looking for a competitive return as it markets suites on the top floor of the five-star Westin Hotel at Lighter Quay in the Viaduct.
They range in size from 32sq m to 75sq m with a fixed return of 6 to 8 per cent. Among the 24 rooms is a suite where David Beckham and Sir Elton John stayed during their last visits to New Zealand.
The surge in interest has made life harder for bargain hunters such as long-time property investor Terry Rota, who specialises in buying city apartments to add to his portfolio or resell on Trade Me.
Rota said investors were “rampant” at the lower end of the market. Six months ago he could buy a 40-50sq m apartment – the smallest most banks will lend on – for $140,000. Now that sum would only buy a 32sq m property.
Signs the bargains were drying up emerged late last year. In November Rota offered $100,000 for a one-bedroom inner-city apartment with a $140,000 reserve, but the property was turned in.
After interest rates dropped in December, the same apartment was re-auctioned and sold for $167,000.
Martin Dunn, of City Sales, spotted an opening when he realised older investors were starting to buy apartments.
Realising they feared their property would be trashed by tenants, and not wanting to be lumbered with the day-to-day management, his company last week launched a new venture.
It is offering 23,000 apartment owners $10,000 free insurance coverage for malicious damage if City Sales managed the apartment as part of an “aggressive” expansion of its rental and property management department.
Graham Smith, manager of Barfoot & Thompson’s city residential office, said activity in the apartment market had increased 50 per cent in recent months.
Small apartments were achieving prices “acceptable to the vendors” rather than being passed in.
Rachel Dovey, Bayley’s residential manager for the city apartment market, said lower interest rates meant properties in the “sub-$300,000″ bracket were being “snaffled up” by investors because of the good return.
But property investor Andrew King warned new investors to be “wary”.
“It is a business and it is risky.” King, vice-president of the New Zealand Property Investors’ Federation, criticised get-rich-quick property seminars that pushed people into buying property without educating them properly.
He said there were plenty of good books on property investment and free advice available from property investment associations.
admin Uncategorized apartment, Auckland, properties, property experts
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