LEASEHOLD....YOUR DAD WAS RIGHT.... (MOST OF THE TIME)
When your Dad said: "And never buy leasehold!" he was right to a large extent. And certainly a "leasehold investment" is an oxymoron (those aged under 40y click to Dictionary).
But markets change and we believe, right now, that leasehold delivers a compelling opportunity. And I'm putting my money where my mouth is with a concerted radio campaign to promote leasehold apartments....as they say on the McDonalds ads..."for a limited time!"
Let me explain.
Despite the tabloid rantings of the NZ Herald on Auckland’s housing market over the past two years, values have held and the spellcheck generation faces an entry point of around $500,000 just to get started. And no, New Lynn doesn't appeal in any case.
So consider this – as a startup:
Last fortnight we sold at auction a leasehold two bedroom, two bathroom, near new suite down on Beach Rd for $120,000.
Not a misprint no, but I did forget to add that it included a carpark, gymnasium and swimming pool. Oh yes, and a tennis court.
$120,000...how come????
The Ngati Whatua maori leaseholding covers all the land between Quay Street and Beach Rd, Britomart Place to The Strand. The apartment complexes on the site: Scene One, Two and Three, Stadium, Cuba, The Docks, Hudson Brown, Railway Campus (now Grand Central), The Landings, Mirage, 8 Quay, Cotesmore Way, Parnell Terraces and Dovedale Place – 1,870 units in all.
In order to encourage development of this previous wasteland the Ngati Whatua offered in 1996 a 150 year terminating lease but, extremely generously in my view, with the first 15 years rent free.
You got it. August 2011 is D Day - or is it?
Much of prime London is leasehold.
All of China is leasehold (barring bits of Hong Kong).
All Auckland CBD waterfront apartments are leasehold.
Where we warned publicly from 2004 that the apartment market was paying through the spruikers freehold prices for leasehold apartments we believe now the pendulum has swung the other way ....to the point that a massive overcorrection has occurred, driven by the uncertainty on the Ngati Whatua block certainly, as to where ground rents are headed.
We believe construction costs for new apartments are in the $7,000m2 range. And you can buy leasehold from $1,000m2.
An 85% discount?
Yep.
But pendulums swing back and we're going to do all we can to accelerate it.
But right now, ask Dad for a guarantee, let a flatmate pay the ground rent and you pay the apartment off.
Then call City Sales and it's off to New Lynn.
(You'll actually stay in the City and rent out New Lynn).
Call us, but do it now.
Martin
MANAGING DIRECTOR