- An Auckland developer took a $190,000 loss on a Papatoetoe property sold for $1.8655m.
- Five bidders competed, but the sale price was below the $2.055m paid three years ago.
- The buyer plans to build five larger homes, indicating ongoing developer interest in South Auckland.
An experienced Auckland developer who paid top dollar for a Papatoetoe site after purchasing it at market peak has taken a near $200,000 hit despite intense competition for it in the auction room.
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The $1.8655 million the developer got for the Grande Vue Road property at the end of last month is still impressive and is the highest sale price in the South Auckland suburb in the last two years.
Barfoot & Thompson agent Donald Gupta said it was a “top-notch price” and his vendor hadn’t expected to sell it for the $2.055m he paid three years ago when it was marketed as a “gorgeous family home”.
There were five developers lining up for the 1012sqm property and because it fell outside the recently implemented red zone it did not have any wastewater constraints and could be developed almost immediately.
Gupta said the “motivated developer” had decided to put the property on the market after land-banking it for several years. He had several other developments underway in East Auckland and had made the decision to sell at a loss and reduce some debt.
“They are experienced developers so they know the market and they knew that they could not get that price in today’s market.”
Developers were drawn to the large flat 1012sqm site. Photo / Supplied
The three-bedroom home will be replaced with quality affordable housing. Photo / Supplied
Gupta was also in the process of listing some of the developer’s other unwanted developments, which could also sell for less than what he bought them for.
Bidding for the Grande Vue Road property opened at $1.6m before pausing for negotiation and then resuming at $1.61m. Further bids were made and by the time the property was announced on the market at $1.855m there were just two bidders left.
Gupta said most of the 13 bids were careful and considered and the successful purchaser secured it with a final bid of just $500.
“The guy who was in the room he brought a calculator and pen and paper and was doing some numbers.”
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Everyone looking at the flat section in a good cul-de-sac location, which was walking distance to a supermarket and train station, had wanted to build residential houses, he said. However, their plans varied considerably and ranged from nine two-bedroom houses to four much larger standalone homes with double garages.
Gupta said the developer who bought it was on a mission to build more quality, affordable homes in good areas of South Auckland and was probably going to bowl the existing home and build about five slightly larger homes in its place.
The owners of two neighbouring houses on Omagh Avenue, in Papatoetoe, have joined forces to try and target developers. Photo / Supplied
Gupta said Wednesday’s auction showed developers had returned to the market and were ready to pay good money for the right properties. He knew of 40 to 50 developers who were actively looking including the underbidder.
“They are happy to pay top dollar if the property is right.”
The right property usually had flat land between 600sqm and 5000sqm, was in a good central location in Papatoetoe or Mangere and a good shape.
Gupta is also selling a property at 19 and 2/19 Omagh Ave, Papatoetoe, where two neighbours’ have joined forces in an attempt to lure developers to the combined 963sqm section. There is a three-bedroom home at the front of the property and a small two-bedroom brick and tile house at the back.
Ray White Manukau co-owner Tom Rawson said the recently introduced Watercare infrastructure constraints impacted pockets of Otara, Mangere, Papatoetoe and Clover Park and meant properties in those affected areas could not be developed for the next 10 to 15 years.
A large 5419sqm development section on McKenzie Road, in Mangere, sold under the hammer for $6.3m this week. Photo / Supplied
“If you are trying to build new dwellings there, you have no chance of putting in a new dwelling because there’s no capacity for new connections.”
Rawson said properties sitting outside what was being dubbed the “red zones” such as the Grande Vue Road property would now fetch a premium because they didn’t have the constraints and could still be developed.
“If we’ve got a property that isn’t constrained then it’s more popular than one that is and the pricing reflects that as well.”
A property in Papatoetoe sold earlier this year for $1.35m, but now a similar property on the street is struggling to get any offers over $1m. Rawson said developers weren’t interested because the street was impacted by the wastewater constraints and homeowners weren’t prepared to pay as much.
He said it was likely that some of these properties in the “red zone” would likely be sold off because it would not be commercially viable for a developer to hold onto for another decade and could be picked up by families instead. “They will probably just exit it and count the losses ... there will be massive hits because whilst they were higher land value and now they won’t be.”
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