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Five out of nine Auckland apartments failed to sell at auction yesterday in a turn a real estate chief blamed on leasehold titles.
City Sales took the inner-city units to auction before about 100 people at the Hopetoun Alpha on Beresford St. But it failed to sell half, and the firm's managing director, Martin Dunn, blamed it on the high number of leasehold apartments in the offering.
"I'm disappointed in the result," Dunn said after the auction. But if more of the units were sold on freehold title, it would have cleared most of the apartments on offer, he said.
"People have begun to realise they've paid freehold prices for leasehold properties," Dunn said, predicting that landlords who failed to get good returns from leasehold apartments would have to shift into those places themselves.
A dramatic rise in leasehold payment demands at the Beaumont Quarter apartment complex opposite Victoria Park had clearly illustrated problems with this type of property.
As an example of issues with leasehold properties, Dunn cited the sale of a one-bedroom Princes Wharf unit by City Sales recently for just $89,000. Steep annual payments on the unit of about $12,000 were one of the reasons for the low price, he said.
Unit 8G at 22 Beresford Square was the first place to be passed in yesterday. The owner of the large one-bedroom apartment offered the use of the carpark, but the unit was handed in at $150,000.
A four-bedroom unit at 16 Liverpool St, on a freehold title, was passed in at $170,000. Auctioneer Neil Newman said the property was generating $30,000 a year rent.
Two leasehold places on Princes Wharf were then passed in. No bids were received for what Newman called a "monster": a 100sq m one-bedroom unit, passed in at $250,000. A studio unit associated with the first property also failed to sell. The units are both in Shed 20, a leasehold property on a title which is non-renewable.
A two-bedroom leasehold unit in Scene One at 2 Beach Rd on the waterfront was also passed in.
Bidding was most active on two Volt on Queen units, one selling for $220,000 and the other going for $223,000. Blue Chip investors quit a unit in The Landings for $200,000, a sum said to be precisely half the $400,000 they had paid.
