Metropolis sale prices take a heavy hit

By ANNE GIBSON

A tenth-floor apartment in Auckland's Metropolis tower has sold for only $175,000, dropping in price by about a quarter from the original $239,000, says the selling agent - and it comes with the furniture.

City Sales managing director Martin Dunn said apartment 1015 was sold by his firm at a public auction which drew 80 people and "four lively bidders, including one via phone bidding from Melbourne, who won in the end."

The one-bedroom unit is furnished, has extensive city views and a state-of-the-art kitchen. The price included GST.

It originally sold for $239,000 including GST, Mr Dunn said, and could be rented out for about $350 a week.

The sale follows revelations last month that Metropolis apartment prices were down sharply, with some selling for only 70 per cent of what investors paid in the late 1990s when the tower was being built.

Guaranteed rental returns of 9.5 per cent expire on Friday and hotel operator Ascott Metropolis has warned that investors could get a bill instead of a cheque from now on.

On Wednesday, City Sales will auction a two-bedroom unit on level 21.

Mr Dunn said the much lower prices being paid for the apartments showed vendors were becoming more realistic about what they could expect to get.

Bayleys Real Estate is selling many of the Metropolis apartments, heading a website promotion "final Metropolis sell down" and doing extensive marketing.

Top of its pile are the upper three floors of the building, valued "from $4 million up each", says Robert Platt of Bayleys.

Further down, Bayleys is trying to sell 10 fully furnished serviced units from levels 20 to 28. They are listed between $307,000 and $479,000.

John Crocker of Bayleys Residential Property Management estimated the units could get gross rentals of between $440 and $580 a week, saying top-quality apartments like this "are in particular demand by corporate tenants at present".

Seven penthouses on levels 31 to 34 are also up for grabs and their list prices range from $825,000 to $1.77 million.

Mr Platt said prospective buyers need not worry about finance or management of the units.



But Auckland property investor and developer Olly Newland wants to warn people about buying a Metropolis apartment, saying he was caught out buying Sydney apartments off the plans in the 1970s and lost money. "Nothing has changed in 30 years."

Mr Newland, formerly chairman of the collapsed Landmark Corporation, said Bayleys was engaging in a fire sale with "a gaggle of furnished studio apartments being aggressively marketed on a 'make any offer' basis."

Neil Prentice, a spokesman for Bayleys, said the firm was not engaged in a "fire sale" and was not beating down prices. It was trying to get the best prices possible.

Mr Newland said he had looked at one Metropolis apartment which was listed for $300,000, but was told by an agent that he could make an offer of "$200,000 upwards".

Emphasising that he was not questioning the quality of the development, which should be praised, Mr Newland said he wanted to warn prospective buyers to be careful.

"The marketing techniques used then [in Sydney in the 1970s] were exactly the same as now - low deposits, fully managed, guaranteed returns, no interest for 12 months, plus all the bells and whistles.

"What nobody told me then and what apartment buyers are finding out too late nowadays is that apartments are exactly like Japanese cars - they look great when they are new, but drive them away and you lose 30 per cent of their value the moment you go through the showroom door.

"Metropolis is like this. Many of the apartments are being marketed at two-thirds and less of the original price paid. The owners are losing their equity as the meltdown accelerates and this is not helped at all by agent Bayleys' aggressive marketing of the remainder at knock-down prices."

He criticised the financing arrangements, saying people could only get 100 per cent finance if they had collateral, such as another property with a low level of debt. But gearing up one property to finance another could endanger the investment in both properties, he warned.

"Metropolis is a wonderful quality building on a superb site and is a credit to its developers. There is no doubt that one day people will be queuing up to buy into it. Too bad that time is not now."

The Ascott Group

City Sales

Bayleys