Wealthy property investors and developers are taking advantage of Auckland’s market slump to pick up a swag of properties in prized locations.
The multi-million-dollar sale of a block of units in Greenlane at the end of May was one of several high-profile deals completed in recent months that have signalled the return of buyers with long-term ambitions.
Agents told OneRoof that buyers were filling their development pipeline and targeting sites with good holding income, like blocks of apartments or motels in popular suburbs.
Colliers associate director Ben Jamieson sold the nearly 4000sqm site at 226 Green Lane, next to the upmarket Farro Fresh supermarket and Alexandra Park, for $8 million – $4m below its 2021 CV. The property comprises 30 units, has an annual net rental income of around $385,000, and last changed hands in 2009 for $3m.
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Jamieson was unable to disclose the buyer’s identity but told OneRoof he was working with several developers to find sites. They all had specific shopping lists. “They’re looking for well-located sites in affluent areas with holding income,” he said.
Jamieson said 226 Green Lane was a boarding house with good buildings on site and a good holding income. “[The buyer] will probably do a little bit of refurbishment on it and then look to develop into terrace housing in the medium-term,” he said.
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The motel-heavy area is zoned for terrace houses and apartments, is in the prized double grammar school zone, and is close to amenities and transport links, so is ripe for transformation. The transition into a quality residential neighbourhood started a decade ago, with the development of the Alexandra Park apartment precinct over the road, where Australian developers have announced plans for another 193 apartments.
Jamieson said bigger developers were looking to buy again, some focusing on finding projects that were already consented so they could start building immediately; other buyers had a two- to five-year horizon.
“There’s definitely been more activity in the last three months. We had an auction for a property in Eden Terrace last week that had six bidders and got $3.15m, which was a really good price for the property.”
Bayleys head of insights Chris Farhi said the drop in interest rates would bring confidence to the market.
“The last two and a half years have been pretty soft. But buyers are cottoning on to the fact that we are at the bottom of this current cycle,” he said.
Bayleys head of insights Chris Farhi says developers don't want to be caught short again. Photo / Fiona Goodall
Farhi said the big developers were focused on keeping their pipeline full while other investors were buying to hold and eventually sell to those developers.
“The large-scale developers, who have say 20 projects, they’re more consumed by forward pipeline. A lot of them were caught short during the market peak, because they didn’t have enough stock to sell. If you burn through your pipeline and you haven’t acquired [property] to start work on, you’ll quickly have issues.”
Farhi said some developers had learned how tough it had been to shift cheaper new stock in the current market and may switch to better quality products.
“Buyers are becoming more picky and we would expect that will translate to developers working towards quality and better design,” he said.
At the other end of the scale, eight bidders – a mix of investors and developers – tried to secure a block of three units at Barfoot & Thompson’s auction last Wednesday.
A block of units on Mono Place, in Mount Wellington, Auckland, sold under the hammer for just under $2m. Photo / Supplied
The 1960s brick and tile flats on Mono Place, in Mount Wellington, sold for $1.95m – more than double what it last changed hands for in 2008 – after 23 bids.
Listing agent Alan Vessey told OneRoof that while the property was not healthy homes-compliant, it outperformed a similar, but compliant Mount Wellington block, which sold for $1.8m a week earlier.
He added that properties like Mono Place didn’t come up that often.
Barfoot & Thompson agent Kiki Wang, who was working with the buyers, said her clients had started building their New Zealand investment portfolio three or four months ago.
While she couldn’t divulge how many properties they had bought so far, she said they were very particular about focusing on multi-unit blocks with big land holdings and good cash flow.
“They bring them up to healthy home rental standards. But they are more land-banking. They think the market is coming back. I have quite a few people looking for land, but the number looking for rental units is smaller.”
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