Abandoned multi-million-dollar apartment block finally sells

A troubled apartment block that hit the market as a mortgagee sale at the start of this year has finally found a buyer.

The listing for the unfinished six-storey development at 468-472 Manukau Road, in Auckland’s Epsom, was withdrawn last month.

McGrathNicol partner Andrew Grenfell, who is one of the receivers for Epsom Central Apartments Limited Partnership, confirmed to OneRoof that the apartment block had been sold in a mortgagee sale.

Grenfell said they would retire as receivers in due course because there were no assets left to deal with.

The property changed hands last month, property records show, and the new owner is the newly established Reeheng Limited, whose sole director and shareholder is Xiao Liu. Liu is also the sole director of Venus Funds, which held the mortgage over Epsom Central.

“Sometimes it is quite normal for a party who has security to effectively acquire the assets using the debt,” Grenfell said.

Liu, the Epsom project’s new buyer, declined to tell Stuff Media what her plans were for the development.

OneRoof has approached the Colliers agents who had been marketing the property for comment.

The apartment block sits on a 1000sqm site next to upmarket supermarket Farro, near the corner of Greenlane West Road, is in the city’s prized double grammar school zone.

The project, known as Epsom Central Apartments, made headlines earlier this year when Business Desk reported that receivers were trying to recover millions of dollars owing from the development.

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Companies associated with developer Xin (Shane) Zhou’s Sky Stone Group have been involved in multiple developments, but now two of the companies are in liquidation and the entity for Epsom Central is in receivership. Zhou himself has reportedly disappeared.

The receivers said the lender is owed $11.8m and the main contractor another $2.3m. Another development by the group, Sky Stone Sunnynook Central, a 15-townhouse project on the North Shore, was also put into liquidation in February.

While Epsom Apartments is on the larger end of the scale and has troubles dating back over four years, it is not the only development to be put on the market for sale mid-build.

Surprisingly, there are buyers for such properties. Harcourts agent Aman Gulia told OneRoof he had cashed-up developers clamouring to buy unfinished projects.

Agents say experienced buyers are on the hunt for half-finished projects they can complete for good yields. Photo / Supplied

Kiwi developer Roger Coulson picked up the troubled Beachcroft Apartments in Onehunga and has re-started construction after a halt of over 12 months. Photo / Supplied

“They’re ringing me and saying ‘I’ve got $15m to invest – find me someone in trouble’,” Gulia said.

“Buyers are having an amazing time. Instead of starting a build from scratch where hundreds of things can go wrong and yields can go down because costs have gone up, you can buy where 70 or 80% of the numbers are on point. It’s the best they can get.

“And if someone wants out, you can usually get it cheaper, so yields might go from 5% or 6% to 7% and it’s faster.”

Gulia said those on the look-out tended to be experienced development companies with crews ready to work.

“There’s more demand than projects available,” he said, adding that in some cases the lender would pick up the project to finish themselves.

“That’s why we’re not seeing the hundreds of mortgagee sales you’d expect. Instead there are people picking these projects up,” Gulia said.

Ray White Commercial director Finn Hurst had noticed more semi-completed projects popping up, usually with some urgency to sell. Big group developers were taking these on because they could usually make a good margin.

“But it is tricky, as buyers don’t have full visibility on what [the build] was to get to this stage, so you have to do a lot of due diligence. The buyers know what they’re doing,” he said, adding that most of the deals he was doing were off-market as vendors didn’t want to be seen as quitting their projects.

Over 20 buyers were happy to re-purchase Beachcroft Apartments, agents says, after their earlier contracts were cancelled when building halted. Photo / supplied

Bayleys agent Jock Kooger added that ideally funders would want to see a project finished and sold down, but if developers miss milestones and funders suspect the project may not pan out – and attempts to work together to get the project finished aren’t successful – then a sale mid-project may be the best solution.

“A lot of the time it comes down to communication with the funder. We’ve been seeing it for a while and there’s more to come with delays from council and so on,” he said.

One development that seems to have succeeded in its rescue sale is the 85-unit block of Beachcroft Residences on Onehunga’s Beachcroft Avenue. The partly-built $85 million apartment block that was abandoned more than a year ago after cost blowouts was bought by Kiwi developer Roger Coulson in June.

Coulson, the former CEO of property development and investment company Starline, told OneRoof that he planned to complete the six-level Beachcroft Residences by December 2024.

Through Bayleys agent Glenn Baker (along with agents Jack Davies and Brittany Broadbent), the new developer reached out to the 50 buyers who had earlier bought off-the-plan and who had been left in the lurch when the original developer, Erson Developments, was forced to abandon the project last year.

Baker said that the “really great” presales now allowed the project to re-start, with the old plastic wrap and scaffolding already removed and new scaffolding installed this month ready for council sign-off.

“About half the buyers, over 20, came back to re-buy. A lot of people still wanted the location, opposite the big new Onehunga Bay Reserve. The apartments are very big, 100sqm for two bedrooms, 155sqm for three, and that’s very hard to find,” Baker said.

“The critical thing for this one is that the concrete structure and roof had already been signed off by council, so the [new developers] just need to do the cladding and finish inside. It’s pretty straight-forward.

“A lot of buyers are pretty excited.”

- Additional reporting Nikki Preston

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