Fears Mt Maunganui apartments losing their appeal

Downtown Mount Maunganui could be heading for an over-supply of apartments after sales slowed over the past six months.

Buyers are shying away from investing in smaller apartments near the beach and developers and real estate bosses are pinning their hopes on a spring recovery.

More than 150 apartments, across a range of sizes and prices, are sitting on the market - and two of the main real estate offices at the Mount have reported average sales of five to six apartments a month.

"That's nearly a three- year supply ... if the situation continues," said John O'Donnell, principal of L J Hooker Mt Maunganui. "It's a buyer's market and the buyers are being very cautious."

He said people were still buying apartments off the plans but they were finding it hard to sell them on.

He knew of a case where an investor paid $415,000 for an apartment before it was built and then sold it for $390,000.

Mr O'Donnell said when the economy slowed people did not have surplus funds and they did not buy luxury items such as holiday apartments.

Developer Peter Cooney, building the six- level Cayman Apartments on Maunganui Rd, said coastal areas were hit first when property investment cooled.

He said the market was in limbo at present ... "people are sitting and waiting because no one is sure what is going to happen".

Mr Cooney said good apartments with realistic prices are continuing to sell - it was the small apartments that were taking longer to move.

He recently sold one of his penthouses in the Cayman Apartments for $1.6 million.

Another developer, Bain McDonald, said "the level of inquiry and activity was not same as we have experienced in the last two years.

"The funny thing is, last year we didn't sell many residential sections but this year we are selling sections - at Papamoa, but not many apartments."

Mr McDonald said people have been listening to Reserve Bank governor Alan Bollard, who is "trying his hardest to pull the hand brake on the property market. But the market at the Mount was very resilient and if interest rates come down, as expected later in the year, then who knows? Sales activity could pick up.

"As a developer you take the good with the bad and ride through the cycles. An apartment at the Mount fits the lifestyle of many people and the product has stood the test of time," he said.

Simon Martin, Harcourts' Tauranga and Mount Maunganui sales manager, said the apartment market had slowed. "It could be just the time of the year. The telltale sign will be in October/November when sales normally kick back in to life."

Despite the slowdown, apartment developments continue to power ahead in downtown Mount Maunganui.

Mr McDonald is completing the 39-apartment Algarve opposite Grove Ave in Maunganui Rd and The Mooring with 30 apartments, is under way further along Maunganui Rd.

He said 75 per cent of those apartments were under contract.

The Mount Central Resort, with 55 apartments, is also being built in Maunganui Rd near Blake Park and Mr Martin said 65 per cent of those apartments were sold.

The smaller Palm Cove Terraces, alongside the Algarve, had eight apartments and six were sold.

Other developments include the Sonrisa on The Mall overlooking Pilot Bay and Customhouse which has retail, office accommodation and two levels of apartments on the intersection of Maunganui Rd, Rata St and Totara St.

- BAY OF PLENTY TIMES