A one-bedroom freehold penthouse apartment in an Auckland tower block beset by remedial issues sold for $158,000 on Thursday in a rapid-fire auction.
Six bidders competed to buy the 46sqm deceased estate, which had a 2021 CV of $290,000.
Bidding started at $50,000 at the Barfoot & Thompson auction and quickly escalated, with the apartment at 76 Albert Street being declared on the market at $150,000.
“Vendors always hope for more, but we got a good price – that’s the market price,” said Barfoot & Thompson agent Alan Vessey, who marketed the property with Stephen Shin.
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The late owner had bought the 24th-floor apartment off-the-plan 20 years ago for $215,000. The flat, which has sea views, a tidy kitchen and bathroom, wood floors, a balcony and car park, was pitched as a student flat to investors, but Vessey believes the owner had lived there himself for a period.
The apartment block has remedial issues, with Vessey’s listing noting that the purchase was “not without its challenges and will need someone who understands the risks involved but will also realize its tremendous upsides. This is truly a fantastic freehold property that could be bought at a fraction of its true value once the remedial work has been completed and a new CCC issued thereafter.”
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Detailed costings and timelines for the remediation are still wending their way through a building committee, Vessey said, but interest in such properties was strong.
There is a market from both experienced buyers, who specialise in buildings with issues, and from other owners in the building who want add to their portfolio. Most of the bidders were known to Vessey and Shin.
“These are cash buyers – you can't borrow money for these – but at $450 a week in rent for the apartment and $70 a week for the carpark, that’s a great return on $158,000.”
Vessey said he was seeing long-term investors back in the market, targeting local tenants rather than the overseas students, who had fuelled the apartment market up until Covid. There is also a market for landlords willing to rent their places for social housing.
“We’re also seeing a lot more traders and speculators, people who will buy then try to get access to the property before settlement so that they can ‘tickle’ it up a bit and flick it on as soon as it settles," he said.
“That’s risky. In situations like that, I wouldn’t do it to my vendors. I’d rather flush out buyers to get the best price."
The sale comes as Barfoot & Thompson announced better than expected sales results for May. Peter Thompson, the agency's managing director, said: “After a dismal month’s trading in April, when sales hit their lowest in an April for 22 years, sales of 723 in May were not far off what was being achieved at this time of the year pre-Covid."
“May’s sales are another sign that the Auckland property market has either hit the bottom of the current cycle or is close to it.
“While both the median and average sales prices for the month eased on those for April, it was the number of sales that is the standout feature with sales being a third higher than the average monthly sales for each of the past three months."
He added that a good flow of new listings reached the market in May, with 1262 new listings for the month being close to what the agency has averaged each month over the previous three months.
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