A huge site in Auckland’s prized double grammar zone has sold for $13 million, delivering its owner more than $8m profit in less than eight years.
The property housed a dated motel complex on a 3665sqm section with development potential half a block from Mt Eden Road, and just a couple of blocks from the shopping centre.
Barfoot & Thompson agent George Fong, who sold the property by tender with colleague Helen Lam on behalf of an investor in October last year, told OneRoof that the buyer planned to hold onto the property long term.
The 23-bed motel had been earning $160,000 a year, and the new owner - an investor - might keep running it for a while.
Start your property search
“It’s in Grammar zone, you can’t lose,” Fong said.
He said his vendor, who paid $4.8m for the property in 2014, had been smart enough to turn away a higher offer that came with the hook of a longer settlement.
“We don’t have developers here defaulting on their settlements, but there are definitely some selling properties [they bought last year] before they settle," Fong said.
The motel sits on a 3665sqm section with development potential. Photo / Supplied
“These are the $2m to $3m deals, not the huge ones. They can’t sell their finished developments to fund the new land because of shortages of materials and delays.
“These are experienced developers, they’ve seen the market go up and down in 20 years but they know now builds are costing more and taking longer.
“Last year I had a $3m deal not settle in July. The vendor kept the deposit and then resold for another $500,000 in August. That was one happy vendor, but it’s a totally different market now.”
Fong said that vendors who had to quit their properties now were happy just to break even on their re-sale, but some were not so lucky.
“If you paid $2m in August or September, now we could only get $1.8m to $1.85m,” he said.
Fong noted that properties in double grammar zone suburbs were more protected because of the scarcity of large sections with development potential in the zone.
“You might lose a little bit – 2% to 3% maybe – but suburbs outside DGZ will lose even more money.”
A two-bedroom house on Kesteven Avenue, in Glendowie,, Auckland, sold for $3m. Photo / Supplied
Across town, in Glendowie, a property marketed by Barfoot & Thompson agents Jane Wang and Dragon Zhou sold under the hammer for $3m, a $1.84m gain on when it last sold in 2014.
Wang said that the two-bedroom 1950s house on a 844sqm site on Kesteven Avenue was zoned for development and sold to a very experienced developer who was one of two bidders for the property.
But interest was down to one to three people at each open home, not the 10 to 15 they would have expected last year.
“There are more buyers waiting and watching, people who were very active last year. But we still have experienced developers who’ve been doing it for years, they know the area, they’re confident," she said.
“They’ve seen the good times and the bad times; they totally understand cycles.
“Home buyers are probably hoping prices will drop, investors are waiting to see and might get out to buy again if it flattens.
“Last year people were getting 5% to 10% more than now, so owners need to find that acceptable. For Kesteven Avenue, it was a great location but we had an owner who was very reasonable, they were not expecting to get what they could have got last year.”
A two-bedroom house on a development site on Alberta Avenue, Point Chevalier, Auckland, sold for $2.92m. Photo / Supplied
Wang said that buyers were holding back at auction. They were not prepared to take the risk and often were armed with less finance from their banks. She said that the change was very quick, much quicker than in other cycles, which has taken vendors by surprise.
“Last year speculators and traders were very active, it was too crazy. So it’s good to be more sensible, not crazy.”
Barfoot & Thompson agent Jason Tsang, who sold another two-bedroom development property on Alberta Street, in Point Chevalier, for $2.92m, said experienced developers were still out there.
“This passed in at $2.8m and sold immediately afterwards. It’s 844sqm, and sold to an experienced guy who’ll move straight away.
“You’d be looking at four-bedroom townhouses, double garaging, those are still selling well off-the-plans. These places may take a little bit longer to come up on the market but they’ll sell really well.”
