A grand traditional home on a big piece of land in a top suburb with sea views.
The Auckland dream property, right?
But what if it has been up-zoned to multi-housing suburban in the Auckland plan, and its CV valued improvements to the property at only $200,000, the land at $6.8 million? Add in a rare Victorian villa, wrapped with verandas, a tennis court and outdoor pavilion, stunning views of the Hauraki Gulf and city, and the choices start to build up.
Ray White Newmarket agents Amanda Kabel and Tanya Kwasza have such a gem for sale on Springcombe Rd, St Heliers. The street is a block above Cliff Road, where the year’s top price for Auckland was achieved: $17.6 million in December 2018. The suburb clocked two other top ten prices in April this year of $10.5 million and $10.2 million.
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But with this listing the agents have presented the classic Auckland dilemma: do you keep the heritage property on a valuable 3037 sq m of land? Create a new mansion designed by a top name architect?
Or do you take advantage of the up-zoning and subdivide? In this case, the agents say, up to 11 units would be permitted under the multi house suburban zoning on the whole street.
“Yes, that's a good word. It is the new Auckland dilemma,” says Valocity’s director of valuation innovation, James Wilson. “Do you build a large family home that attracts that market, or do you develop to full intensity in high value, sought-after areas?
“Subdividing is a big project, you’d need to do your homework on what the market wants in that area. Or it may be that a single house that suits your current appetite for a home, with quite individualised taste, but then when you come to resale it takes longer to find that buyer.”
This year, three St Heliers Bay properties made in the country's top ten sales figures, $17.6 million, $10.5 million and $10.2 million. Picture/supplied.
Wilson says that for each scenario – keep the heritage, build a new luxury place, or subdivide – there are rafts of different buyers seeing different value in the property. He imagines some buyers might hedge their bets, building a new luxury house and keeping the rest as a land bank for when the demand for more intense development in the market picks up.
“It’s all about market timing,” Wilson says. “A lot of the heat has come out of the attached townhouse and small apartment market as the downsizers who would be the main buyers have adopted a ‘wait and see’ attitude on selling the big family home. They want that last $100,000 or $200,000 in their pocket. They are at the end of the property ladder and that would make a big difference to their retirement, so they aren’t going to sell now.”
According to OneRoof Valocity data, land value in St Heliers makes up 76 percent of CV for single homes and 74 percent for multi units. That’s lower than central suburbs in Auckland, where land value in the likes of Kingsland, Grey Lynn or Westmere for multi-unit properties reach between 96 percent and 87 percent of CV. St Helier’s figure is more on par with those of eastern suburbs like Remuera, Orakei or Meadowbank. But on this particular stretch of Springcombe Street, some properties have land values of between 91 and 100 percent of CV, reflecting their potential for subdividing to achieve highest and best use under the mixed housing suburban zone.
Wilson says we will see more of this Auckland dilemma as buyers and sellers figure out the value and how it applies to their suburb. Add in even more complications when there is a heritage building and when building costs for a super-luxury house may now reach $10,000 per square metre.
“In an area of high built amenity, such as heritage suburbs like Herne Bay, Freemans Bay, Epsom or Mt Eden, having a large, character home on the property may over-ride some of the added value from a more intensive underlying zoning,” Valocity’s Wilson says. “The site may be large enough to be subdivided but a high end character home sits right in the middle. In that case, the market may attribute value to the utility of the property as a high end character home over and above the development potential of the site.
“We’ll be seeing more of this Auckland dilemma.”
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