A leasehold apartment in central Auckland has sold under the hammer for $82,000 – $33,00 more than its “super low” declared reserve.
The unit was one of four investment properties attracting heat in the City Sales auction room.
The owner of all four walked away with $381,300 after more than 100 bids were made on the properties.
They hit the market two and a half weeks ago, with City Sales labelling the sell-off as a “leasehold liquidation”.
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OneRoof records show all the apartments sold for tens of thousands of dollars less than what the owner originally paid for them. He had built up his portfolio over several years paying $330,000 for the nicest one in 2006.
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However, City Sales sales manager Scott Dunn said the vendor was happy with the result and walked out of the auction room smiling.
Dunn explained that it was not unusual for leasehold properties to sell for less than what they were purchased because people bought them for rental returns and not capital gains.
“They can be excellent returns. So, for example usually people pay cash for them and they don’t have a mortgage to pay on them. They do have ground rent and rates and things like that, but often because they are often in the sexiest part of town they make excellent rentals, they can be brilliant cashflow producers.”
A two-bedroom, two-bathroom apartment in The Landings on Ronayne Street apartment was the only property advertised with a “super low declared reserve” of $49,000. Bidding opened at $30,000 and the property eventually sold for $82,000 after five bidders placed a total of 23 bids. Buyers also had to consider a body corporate levy of $4328.71, rates of $1770.17 and ground rent of $4350.36 per annum, which was due to be reviewed next year.
A spacious one-bedroom, one-bathroom apartment on Ronayne St, which was arguably one of the nicest in the complex, sold for $88,000. Photo / Supplied
The Landings has a pool, spa, gym, tennis and basketball court which appealed to renters. Photo / Supplied
Minutes earlier a one-bedroom, one-bathroom apartment in the same block, which the agent described in her listing as “one of the nicest we have seen in the complex” also sent bidders into a frenzy. The property sold under the hammer for $88,000 after a total of 18 bids.
A three-bedroom, two-bathroom apartment in The Landings attracted a whopping 73 bids, while a one-bedroom, one-bathroom apartment in the Hudson Brown complex clocked up 19 bids. They sold for $105,300 and $106,000 respectively.
Dunn said the prices seemed to appeal to investors looking for more rental properties.
“Some of those ones can rent for close to $700 a week. The facility has a pool, spa, gym, tennis court, basketball court so they do make excellent rentals.”
A lot of people in the room were bidding for more than one of the leasehold apartments. One investor managed to add an extra two apartments to his portfolio after winning two of the auctions.
Dunn told OneRoof last week that a large number of buildings including The Landings and Hudson Brown apartment complexes on Ngāti Whātua land were due to have their ground rents renewed next year.
He said people would be concerned about any imminent ground rent reviews, which usually occurred every seven years, because it could make the cost of owning a leasehold property unsustainable.
“There are many instances where the ground rent has doubled and this has completely crippled people financially.”
However, he added that buyers usually did the maths taking into account any possible ground rent increases and the cost of rates into account when working out what they would be prepared to pay for leasehold apartments.
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