Developers trying to blow off the competition for desirable Auckland land with pre-auction offers are being trumped by their rivals.
A developer offering $3.7 million pre-auction for a pair of properties on Parry Street in Sandringham ended up paying $5.085m under the hammer when the vendors and agents held firm on going to auction.
“There were two early offers, one came in after only five or six days,” Ray White agent Bryce Taylor, who marketed the property with Josh Lowe, says.
“But we’d been flooded with 20 or 25 developers looking at it. We knew we had a good auction, and we knew there was a lot more money there.”
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The agents say there were eight bidders for the property – a flat section on 1485sqm zoned for density.
“You could put eight standalone four or five-bed townhouses or 12 three-bed terraces on that site,” Taylor says.
Agents say the 1485sqm site, currently home to three families, could fit eight townhouses or 12 terrace homes. Photo / Supplied
“There’s easily the demand, it’s close to the city, and a four-bed townhouse could sell for $1.5m to $1.6 m.”
The pair admits that there are not enough large sites that are easy to develop – flat, all the infrastructure in place, close to transport and the city – to satisfy the demand.
“There were seven more [developers] in the room, all bidding up to $5m, so there’s obviously more money out there. Many of these are people who have just finished selling off other developments, so they’re comfortable being out in the market again,” Taylor says.
Lowe says it took a few years for developers to figure out how they could work the zoning for the Auckland Unitary Plan, which became operative in late 2016, but they are now confident to do the math.
“They hear stories of developments like one in Panmure that sold seven terrace houses off the plan in 24 hours – that shows them the market is there.”
Taylor adds that the vendors had owned the neighbouring properties on Parry Street since the 1970s, with three families sharing the two houses.
“There’s a real feel-good story, that all the five siblings can go off and buy themselves something new and nice,” he says.
One of the seven under-bidders who missed out on Parry successfully bought the other development lot on the day’s auction slate, a 1971sqm site on Gilletta Road, Mount Roskill close to Lynfield Cove beach and reserve for $3.8m.
A 1971sqm site on Gilletta Road, Mount Roskill sold at auction for $3.8m. Photo / Supplied
Ray White agent Tim Cai, who marketed the property with Kate Jiang with concept plans for five townhouses, says that the sloping section was zoned for single family homes, meaning minimum sections of 600sqm but the vendor had already got resource consent and engineering approval.
“They’d started the process in 2013, way before the unitary plan. But it needed buyers with a lot of experience to work out how to do the civil works for driveways, retaining and so on. We did get a few family buyers wanting to buy one section, but title hasn’t been issued.
The Mount Roskill property was sold with resource consent and concepts for five single homes. Photo / Supplied
“The buyer might sell one or two lots, keep one for himself and then the rest for investments. He wants to start building straight away.” Cai says that while a flat site with density zoning like the one on Parry Street in Sandringham might get $3424 per sqm, the price of $1117 per sqm for a sloping site without the density and further away from the city was a good price.
“If they can get high density, that’s the developers’ preference, but we still had seven to eight enquiries per week and four bidders.
“The low point for Auckland developers was 2017 to 2019 when you couldn’t get the end price you wanted, but now there’s obvious price changes. If you have stock in hand you have to build.”
