KEY POINTS:
Apartment buyers in the country's tallest new luxury high-rise are failing to settle deals on their units.
Cash-strapped purchasers in Takapuna's $137 million Sentinel have been forced to forfeit thousands of dollars in deposits because they cannot afford the new units they had contracted to buy.
Rick Martin
of Cornerstone Group developed the block and acknowledged this week that some buyers had defaulted but he said it was only a few.
"We're pretty well done ... but there were about half-a-dozen. We've sold most of them. We've got their deposits," he said, adding that the defaults were reflective of a difficult real estate market.
But he dismissed the significance of defaults, saying many had been opportunistic buyers.
"Probably the speculators have got caught. But they never intended to settle and wanted to flick their places anyway," he said.
One property consultant said the buyer of a $900,000 unit had paid a $38,000 deposit and been forced to forfeit this because he simply could not afford to settle.
The buyer had paid the deposit on the unit when house values were climbing and money was easy to raise. Now, it was more palatable for him to take the hard option and lose that money than to attempt what is now the impossible and try to borrow money he needed to close the deal, the consultant said.
"People have paid deposits and are simply walking away and valuers are ducking for cover because the original values of those units were questionable," the consultant said.
That is a far cry from action in the tower a year ago when a form of opportunistic "futures trading" was taking place on some Sentinel units which were selling more than once, even before the block was finished.
Unit buyers engaged in a flurry of title trading in the hope of making quick money. For example, some units which fetched around $900,000 originally had resold for more than $1 million, the tower's marketers said last year.
Martin acknowledged the value of Sentinel units had declined somewhat but he said this was less of an issue in the tower than it was with the buyers' homes in Auckland.
He cited the case of one Sentinel buyer who had a large house on Lake Pupuke. Because the residential market had turned, that place was much harder to sell, Martin said.
And even the wealthy businessman who paid a record $11 million for the Sentinel's penthouse is yet to settle this deal, announced with great gusto a year ago.
Mike Panjwani, with business interests in New Zealand, India, Singapore, Europe and Dubai, struck a deal to buy levels 29 and 30 of the Sentinel.
Martin said he could not discuss the precise arrangements and said questions should be addressed to Panjwani. But he confirmed that settlement had not yet taken place. He expects this to happen in the next fortnight.
The penthouse deal was announced in September last year and work was completed in the tower some weeks ago.
The Herald reported last year that in 2004 and 2005 the Singaporean-based Panjwani sold a collection of large Auckland investment buildings worth more than $25 million through his company Empress Leisure to failed apartment specialist Blue Chip, which has 26 companies in liquidation and faces creditors' claims listed earlier this year at $80 million.
Companies Office records list Panjwani as the director of My Homes and Empress Management.
SENTINEL
* 117-unit North Shore tower.
* Unit buyers are defaulting.
* Penthouse deal has not settled.