A property investor is selling a dozen Auckland apartments in one go, OneRoof has learned, as agents and property experts warned of increased financial stress for landlords.
City Sales manager Scott Dunn told OneRoof that he had an out-of-town investor who was pulling out of the Auckland market and was “liquidating” his portfolio, which comprises 12 leasehold units in Auckland CBD.
Dunn said it was unusual for an investor to put their entire portfolio on the market in one go.
“A lot of sales currently are investors liquidating because they’re under a bit of pressure financially,” he said, adding that his vendor’s situation had changed and he now wanted to cash in. “He is liquidating all 12 units.”
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The properties are located in the Q-City, on City Road, and Q Central, on Liverpool Street, and are mix of one- and two-bedroom apartments, most of which have car parks.
The asking prices for the 12 apartments range from $99,000 for 8B/15 City Road to $210,000 for 6C/34 Liverpool Street. Dunn said the investor was open to selling all 12 to one buyer, or selling them off individually.
Dunn said the vendor bought the first of the apartments about a decade ago and had steadily added to the portfolio over a five-year period. He noted they had been cheap and offered a good return. “The average yield is 10% gross,” Dunn said, highlighting that the average weekly rent for the one-bedroom units was $360, and between $500 and $650 for the two-bedroom units.
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Outgoings on the apartments range from $14,000 to $17,000 per annum, which cover the buildings’ expenses, ground rent and rates. The leases run until 2086, with rent reviews every five years. Dunn added that neither building had remediation problems.
Dunn said that some of his vendors were selling up now, thinking: “Oh, gosh, we just made so much money”, but “some are just finding their mortgages expensive and they want to get money in the bank account. Or they might have an Airbnb and they haven’t had a guest in the last six weeks. There are a lot of reasons why.”
Dunn said that sales volumes for 2023 were down on previous years. “We’re having more difficult conversations and [fewer] opening bottles of champagne after the auction these days,” he said.
He said the last time the agency listed an entire portfolio was a year ago. “We had someone sell 10 leasehold apartments on Princes Wharf. The ground rents were just creeping up on those ones.”
City Sales manager Scott Dunn: “We’re having more difficult conversations these days.” Photo / Supplied
Changes to tenancy laws and tax treatment of investment properties in 2021 have been criticised as unfair by some investors. Debbie Van Den Broek, former president of the Rotorua Property Investors Association, said she was seeing a lot of stress among investors.
“One of our family members who has rentals, hasn’t had a great year. He has to find money for the tax bill on the rentals, although they don't actually make any money, because [the rent] all goes to mortgage rates and insurance. It’s just crippling him,” she said.
Wayne Shum, senior research analyst at OneRoof’s data partner, Valocity, said it was likely many investors were sitting tight for now to see if there was going to be a change of government at the elections later this year, with some banking on National/ACT amending Labour’s recent laws around property investment.
Shum said sales of investment properties had shrunk in recent months, dropping 42% from 7631 in the first quarter of 2022 to 4403 in the first quarter of this year. He pointed out that both quarters are well down on the average of 10,000 investment property sales per quarter between 2017 and 2020.
Shum noted that the sales figures did not necessarily represent the number of investment properties on the market. “It takes two to make a sale. If you can’t find a buyer, you can’t sell,” he said, adding that the Auckland city apartment market was particularly challenged because first-home buyers were unlikely to step into the vacuum left by investors, unlike other property markets in New Zealand. “In Auckland CBD there are not many first-home buyers for apartments.”
He said investors looking to buy currently might be more inclined to buy new townhouses thanks to the discounts being offered by developers and the fact that with new-builds “you still get deductibility”.
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