An Auckland developer made a gross profit of $299,000 when he sold a three-bedroom house in West Auckland for $1.5 million – just over seven months after he first bought it.
He had snapped up the 1960s house on Mason Street, New Lynn, in February for $1.201m, intending to build townhouses on the 809sqm site, which is zoned for urban density.
Barfoot & Thompson agent Ben Feng, who handled both sales, said his client had also bought other land for a bigger project on the North Shore and so was quitting his New Lynn holding.
While the developer had done some preliminary planning work, the property did not sell with any resource or building consents in place, so a buyer would be starting from scratch and facing the additional cost of design and consents, Feng said.
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That did not deter the bidders. The house was billed in Feng’s advertising with the headline “Vendor’s instructions are clear! Must sell!” and he said many developers didn’t even need to visit the house to figure out its worth.
“Developers all think the market has picked up, they don’t think things will drop, but will get better. There were multiple buyers, some investing to buy and hold, others to develop later.”
The property had a CV of $1.6m, of which $1.4m was in the land value. The sale price means the vendor earned on paper just over $1300 a day.
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Feng said that seven other developers were willing to take the property off his vendor’s hands. Bidding at last week’s auction started at $1m but quickly ramped up to $1.48m when the property was declared on the market. Three bidders fought it out to the end, he said.
“If you get a good auction, people get emotional. We got to $1.3m, which was our appraisal, then $1.4m, another bidder jumped in.
“The buyer is a well-known developer. He’s not sure yet what he will do, so is doing the numbers with suggestions from a planner and myself.”
Feng said even after paying $1.5m for the land a developer could expect to make good money when they come to sell in a year or two. He said the vendor had looked at putting on four or five standalone townhouses, which in the current New Lynn market are fetching “easily” over $1m.
“It’s not a perfect site, as it had some slope on it. But all the services were there on the outside, there’s certainty and you don’t have to ask neighbours for permission, developers like that.”
Feng said that the buyers who missed out are back looking for sites, adding that the cashed-up ones had been buying all through 2022, and now that they’d sold down finished projects they were ready to start again.
The result suggests a pick-up in the auction market this past month.
At their second mega-auction in South Auckland yesterday, Ray White Manukau saw 33 lots out of 55 properties sell under the hammer, with another cluster of places under negotiation or taking multi-offers today.
A total of nearly $28m property sold on the day, with 213 bidders registered, despite some pre-election jitters from some buyers, co-owner Tom Rawson told OneRoof.
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