29 Jun 15
Successful selling in the Auckland apartment market
This is the highly requested White Paper Report by City Sales, June 2015
This report examines several aspects which are important for Auckland apartment vendors considering sale of their property. It points out differences between Auckland’s apartment market and housing market and why they should not be confused.
Micro markets within the apartment market are discussed, as are the ‘imperatives’, the three most important things which vendors must understand before selling. Success across all three leads to a successful sale. Finally, agent expertise and experience a vendor must look for
when selecting representation is summarised.
AUCKLAND – A MACRO VIEW
Auckland is unique. If you look at Auckland from above, there is an imaginary rubber band which constricts growth to the centre and prevents development from spilling beyond the city’s boundaries, both geographic and planned.
To the East and West these boundaries are very clear. Auckland is an isthmus between two picturesque harbours, the Manukau and the Waitemata.
To the North and South, these boundaries are a little more complex. The introduction of the Auckland Council’s Rural-Urban boundary states that 70% of Auckland’s growth must be restricted to within the city’s current boundaries.
The Auckland Council has indicated with its Unitary Plan that it will not allow Auckland to spread to Warkworth and Hamilton, destroying the city’s green belt and creating another Los Angeles. Like London, the city will progress as most do – to intensification. Apartment living spreading from the central business district to throughout the suburbs. This intensification will require and allow for continued infrastructure development and the maturing of an exciting south pacific hub, the Queen City. First ‘home’ buyers will in fact begin with affordable apartments, and move up the property ladder from there.
APARTMENTS VS. HOUSES
‘The Auckland Property Market’ is actually a misnomer. In Auckland, we have a Housing Market and an Apartment Market. These markets both behave differently to each other and indications or forecasts from one cannot and should not be applied to the other.
The Auckland housing market entertains a demand which increases by the day, 100 new Aucklanders per day according to Auckland’s Mayor, Len Brown. This market of buyers are jostling for position to be the owners of a new home, which are in limited supply as we quickly run out of space to build them.
The Apartment market also entertains a demand which increases by the day, the split of investors to owner occupiers skews differently here as investors typically make up 70-80% of the ownership (see City Sales Apartment Report). This market may at times need to jostle for position, however unlike the housing market, the apartment market can grow almost indefinitely – upwards. With up to 4,000 new apartments being planned and built at any one time the supply of apartments will always have the capacity to keep up with demand (it may slow and keep pace at times, but the space to build new apartments will always be available).
Vendors must consider the boom in apartment development and construction, and what the thousands of new apartments which are about to come on to the market, all built to a higher standard than existing stock, will do to the value of their apartment.
VARIABLES AND ISSUES
Within the apartment market, we have micro markets.
Planned or not, these each require unique and deliberate attention.
Delving beyond the ‘is it north facing?’ are many important factors which will determine the best path of introducing buyers to a suite. It is important to remember here that everything is saleable, all of the time.
Leasehold buildings attract a specific buyer group which must be targeted in a specific way. Within the leasehold group there is glamorous waterfront living and entry level, high return accommodation near the Learning Quarter. Glamorous waterfront living won’t gain the traction it deserves when promoted to an investor audience, vice versa a Learning Quarter suite won’t conjure competitive bidding when aimed at owner occupiers.
Buildings with remedial issues have buyers also, however they cannot be credibly promoted without full knowledge, understanding and documentation of the building’s history. See ‘representation’.
Suites in the City Fringe and wider City Circle are gaining momentum as the Urban Plan takes shape. There is a difference too between an apartment in Takapuna or Newmarket to its counterpart on Nelson Street in the CBD. Where the temptation may be to commission a local suburban agent who sells houses in the area, a Unit Title specialist is required to market and sell any form of unit titles as compliance has become immensely specialised and scrutinised in this field. The marketing and selling of Unit Titles (apartments, units and townhouses) is a more complex and litigious endeavour than of residential houses. City Sales has been specialist in unit titles since 1997.
When preparing your property for sale, there are three imperatives which are instrumental in a successful sale. A successful sale being one in which multiple offers (or bids) are secured, utilising competition to leverage sale price.
Access is required for two stakeholders, both the agent (and their colleagues) and potential buyers. Should this be an issue due to difficult tenants or other reasons, City Sales will advise on how to overcome this.
Price expectations should be discussed with your agent and made clear in the first instance. Your agent has knowledge of your building and access to recent sales which can shed light on the price category your suite may fall into. Setting a list price or auction reserve at the right amount is critical to attracting buyer attention.
Exposure and marketing are in essence, the creation of competitive interest in your apartment which will in turn lead to a higher sale price. Bare minimum exposure will bring bare minimum interest. Creative and intelligent exposure does not have to be expensive (in some cases the expensive options are indeed the most appropriate avenue) and will more than pay for itself by securing genuine interest.
As discussed previously, marketing packages may sometimes need to be created bespoke to best promote a particular suite. In addition to four expertly designed marketing packages which range from $225 to $1,615, City Sales has access to new technology, Radio air time and an in house video production suite which differentiate listings from the norm.
Virtual Open Homes allow buyers to ‘walk through’ a property from the comfort of their home computer or tablet, at a time that suits them and without disturbing tenants. A buyer based in Saudi Arabia or China can easily ascertain a sense of space, light and proportion from the other side of the world.
A large proportion of our buyers purchase because they have heard us on radio. We invest significantly in this medium. As well as constant branding which keeps our phones ringing and our inboxes full, we offer the opportunity to promote some apartments on infamous Leighton Smith show on NewstalkZB, which often sees the property sold within minutes.
City Sales leads the field of video production with an in house video production suite and experienced videographer, expert in video marketing and the Auckland apartment market. Our videos don’t only promote the apartment itself, but the culture and surrounding area. Working together with our marketing manager, videos are promoted digitally to an online audience of purchasers.
No other agent or agency rivals City Sales’ creativity and efficiency when it comes to marketing options.
Selecting an agent can be daunting. How can you be sure they will be committed to acting in your best interest? We give you a few pointers.
- First and foremost, if you own an apartment in Auckland, you must choose an experienced agent. One with an intimate knowledge of the Auckland apartment market and its associated complexities and responsibilities.
- An intimate understanding of the Unit Titles Act 2010 is critical. Failure by your appointed agent to understand and comply with responsibility under the Act will expose you to serious legal complications.
SERVICE AND EXPECTATION
Employing the services of an experienced and informed agent, as with employing any professional allows you peace of mind devoid of the pitfalls of doing it yourself. To coin a phrase, DIY disasters are just as prevalent when negotiating a private sale as it is when attempting that bathroom renovation. It is every bit as stressful and expensive to resolve, and can involve unnecessary exposure to litigation.
The apartment market is particularly fraught with complexities, including but not limited to Pre-Contract Disclosure Statements, Body Corporate, AGM and EGM minutes, Pre settlement disclosure, Additional disclosure… among others. You must employ an agent who is expert in all areas of compliance.
The apartment market includes further considerations such as complex leaseholds, hotel pooling arrangements, hotel lease variations, termination clauses and GST. Serious legal implications can arise should the above be misunderstood or neglected.
Your appointed agent should provide a proven sales record and genuine evidence they are qualified to advise on all of the above.
The agent should be licensed by the Real Estate Agents Authority, a governing body under the Real Estate Agents Act 2008, endorsing professionalism, integrity, and consumer confidence. Confirmation that your agent is licensed will be clearly stated on or near their company logo.
For more information on the Auckland apartment market’s performance and history, ask your agent for a copy of the City Sales Apartment Report. Statistics date back to 2005.
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