KEY POINTS:
The first of the Auckland apartments owned by investors in troubled Blue Chip has hit the market, causing misery for its owners.
City Sales auctioned three inner-city units yesterday and managing director Martin Dunn said the first place was being sold by a couple who bought through Blue
Chip.
They lost $192,000 when their 40sq m unit in Tetra House on Wakefield St went under the hammer after fierce bidding. They will pay a further $15,000 for auctioning and marketing, recording a total net loss of $207,000 on an investment meant to help them save for retirement.
Tetra House was finished last year but the couple bought the unit off the plans well before it was finished, taking out a Westpac mortgage. Their unit was never tenanted but advertised as "innocent, brand new, unspoiled, undisturbed and vacant".
The couple paid $320,000 and a further $20,000 for a furniture package and GST on top of that, bringing the total to $382,500. The unit sold for $190,500 yesterday.
Twenty companies associated with Blue Chip are in liquidation and initial reports on 19 are due out tomorrow. The 20th, Mide Ltd, lost $11.6 million.
City Sales is dealing with a flood of distressed Blue Chip investors forced to sell both their family home and their Auckland apartments because they borrowed against their equity in their house to afford the unit.
Dunn, who has written to 2000, says many are broken financially and emotionally.
"People are having to sell both their places now - the apartment and family home. We're dealing with people in Invercargill, New Plymouth, Rotorua, a whole lot in Tauranga, Waiuku and Royal Heights in Auckland. So many people are in tears, absolutely devastated," Dunn said.
Marriages were breaking up and some people had suicidal thoughts, he said.
"We are working with an extremely large number and most of them will have to sell. Some, very sadly, listed their homes for sale over the weekend.
"It is rather traumatic dealing with them but the sales process was so slick that none of them ever bothered to look at the apartment or even surf our websites. It is an incredible phenomenon for so many people to simply sign their assets away."
He predicted about 2000 people could lose both their homes and apartments.
Two other units auctioned yesterday were not bought through Blue Chip. A two-bedroom Princes Wharf unit in Shed 22 sold at a $65,000 loss.
A 70sq m unit on level one of The Quays in the Viaduct Basin was challenging to sell, Dunn said.
"We are going to struggle with this one," he predicted. Not a single bid was made.
Dunn said the prices paid yesterday were so low because people had forked out far too much earlier this decade.
Places were still selling but vendors had to be realistic about prices, he said.
"We sold five apartments over the weekend and February was just under 30 sales which is light for us but OK."