Former Hanover land at Queenstown on the block

Jack's Point. Photo / Supplied

A large chunk of prime Queenstown land once owned by interests associated with Hanover and touted as part of the $2 billion Jack's Point development is being auctioned off by its new owners for a fraction of that value.

Instead of a current rateable valuation of $11 million, the owners might be lucky to get $5 million for the 20 scenic sites.

Companies in the Allied Farmers fold, which did the disastrous deal with Hanover and United, are selling 20 debt-burdened sections at the ambitious housing estate near Queenstown.

Rob Alloway, Allied Farmers managing director, said yesterday his firm had already sold 44 Jack's Point lots and this land was part of the Hanover-United/Allied deal which also included the Matarangi Beach Estates in the Coromandel.

The latest campaign at Queenstown is a continuation of the sales process, he said, whereby Allied was quitting the Hanover-United shareholder assets.

But 13,000 Hanover-United investors who are $465 million out-of-pocket should not expect any windfall from the deal, he indicated.

"The first people who will lick the icecream will be the banks.

"We originally had 155 lots spread across a number of holding companies. We are now holding about 111 lots."

The sections were part of the Hanover shareholder support package in the deal which saw investors in Hanover and United issued with shares in Allied, the NZX-listed company whose share price has since slumped.

Although Queenstown land is regarded as a prime asset class, the plots carried major debt when they were transferred to Allied, Alloway said.

"The land was already leveraged with about $13 million or $14 million of debt."

BNZ and Fortress loaned money on the sections which were on average 800sq m to 1000sq m, he said.

"There's not a lot of new sections around Queenstown and this is a premium sub-division.

"The land is worth as much as you can sell it for. We're selling it to pay back the banks.

"But there's absolutely no question this was a great development. Perhaps it was too big for Queenstown and the timing wasn't right," Alloway said.

Bas Smith, Ray White Queenstown owner, is marketing the 20 sections to be auctioned at the Jack's Point clubrooms on March 20.

Smith said the vendor was Lifestyles of New Zealand (2008), which he said bought the sites from the original developer in 2006. The 20 sections are around 1100sq m with government valuations of $450,000 to $550,000, but reserve prices have been set well beneath that.

Instead of yielding around $11 million as one lot, the 20 sections could sell for half that.

"The reserves are $165,000 to $205,000. This is prime land and Jack's Point is arguably the best residential development in New Zealand," Smith said, predicting people in Southland and Otago would be most keen to buy.

"Even at this low point in the property cycle, a 50 per cent discount on valuation is an unbelievable bargain that up to 20 lucky people will benefit from," Smith said.

"Jack's Point has about 20-plus homes being built, 600 sections in total and about 200 have been bought by private owners.

"Another 80 or so homes have gone through the design panel review process and all those people will build in the next six to 12 months."

Jack's Point
* 1200ha southern development project.
* About 15 minutes out of Queenstown.
* Golf/housing/entertainment precinct.
* A 600-section housing estate.
* About 200 sections sold.