1 Comment 1 Commentby Vicki Holder
Martin Dunn of City Sales says there are plenty of bargains available for investors, with prices hugely reduced in many areas and the potential for capital gains finally emerging.
Prices on Maori leasehold land in the CBD and lower Parnell have been heavily discounted - some up to one fifth of their original value - because of a huge anticipated ground rent increase due in August 2011. The apartments were originally sold with a 15-year rent free period.
Dunn is convinced the Ngati Whatua landowners won't "crucify" the leaseholders with absorbitant price hikes in ground rents "because that would create a ghost town which would be self-defeating".
Dunn says he's certain buyers will end up with the bargain of their lives.
Andrew Bond of City Sales has been selling apartments in Ngati Whatua owned Railway Campus, where leaky issues were recently resolved, for between $30,000 and $70,000. Originally they were $100,000 to $135,000 plus GST and they're achieving $250 per week minimum.
People are also buying good two-bedroom apartments in The Landings, The Docks and Hudson Brown for $180,000 to $250,000, substantially less than they were originally.
"Certainly the valuation professional got it all wrong," says Bond.
"When people do the arithmetic, they can't hold on any longer. They paid freehold prices for them and there has to be some differentiation with leasehold."
He also points to Beaumont Quarter apartments, which are being sold off with the option to freehold. The banks are so desperate to sell, the apartments will probably go for a lot less than they're worth, says Dunn.
Next month is also D-day for all the Blue Chip apartment owners as the banks are about to start recalling their debts on these properties. It's just another opportunity for investors to wade in and start picking up apartments for less than half of the replacement cost.
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