32 people become millionaires from one sale

By Julia Corderoy

Owners of these apartments banded together to make some serious cash.
Owners of these apartments banded together to make some serious cash.

The value of good neighbours has never been so high.

These Sydney apartment owners have just become instant "millionaires" by banding together to take advantage of the city's sizzling property market.

The 32 owners of the 32 one-bedroom beachfront apartments, across four freestanding blocks in Cronulla, have potentially made themselves a cool A$1.7 million (NZ$1.8m) each, give or take, from banding together and selling off their properties in one package to a developer, for a total sale price of A$54m.

The one-bedroom apartments in the four, three-storey unit blocks at 49-51 and 55-57 Gerrale Street may be dated and rundown, but sitting on a site area of 2921 square metres just across from Sydney's iconic Cronulla Beach, it presents prime real estate for a developer. So the savvy owners got together and cashed in.

The real estate and property management company behind the sale, JLL, declined to confirm the price range each owner would have received from the sale, but given all the apartments were one-bedroom, divided evenly between 32 would have put A$1.68m in each of their back pockets.

But the agent who negotiated the deal - which was four-and-a-half years in the making - said the result meant most owners achieved a windfall of two to three times the current market value of their old apartment.

"The owners of the apartments were a diverse group and included investors, young professionals and the elderly. With a total sale price of A$54m, each owner will take home a significantly higher sale price for their apartment than if sold individually. Most owners achieved two to three times the current market value of their apartments," JLL's Dylan McEvoy said.

"The Cronulla property market has now revealed itself as quite mature and with a deep buyer base. We will see an increase in developers in the location as they look outside other markets with a potential saturation of activity."

While Mr McEvoy told news.com.au that all 32 owners agreed to sell without much pushback, the sale represents one of the first group strata sales of this nature achieved in the New South Wales market, following changes to the state's strata laws which came into effect on November 30.

As a part of the strata legislation overhaul, just 75 per cent of owners are now needed to vote to "collectively sell" and redevelop their block. Previously, just one dissenting vote could have stopped this.

When the reforms were announced - which garnered mixed reactions to its many sweeping changes surrounding smoking, pet ownership and tenants rights - Fair Trading Commissioner Rod Stowe said it was about "bringing strata legislation into the 21st century".

"The last major reform to strata was back in 1973, and parts of the legislation are no longer relevant in this day and age," Mr Stowe said.

And Mr McEvoy agrees it is a positive step forward, saying the updated laws are a boon for apartment owners across the state.

"We are seeing an increase in owners inquiring about how this process can unlock the value of their properties," he told news.com.au.

"While all 32 owners were keen to sell in this group; they were motivated to come together by the recent changes to the legislation."

John Thomas, chairman of the group of residents at 49-51 Gerrale Street, said it was a feat getting 32 owners across two strata corporations to come to an agreement, but everyone has been satisfied with the result.

"The release of Sutherland Shire's LEP2015 brought about changes to zoning which added significant value to properties on Gerrale Street and presented an opportunity for all owners to effect a collective sale. There was the potential for a developer to carry out a major development for the area containing residential and commercial units," Mr Thomas said.

"A number of leading developers responded to our call for 'expressions of interest'. As you can imagine getting 32 owners across two properties who have varying opinions and priorities was a challenge, however with implementation of the new strata reform laws and the help of JLL and the developer, we were able to pull together a compelling offer for all involved."

There has been no official statement as to what the developer plans to do with the site, but Mr McEvoy said it has potential for a nine-storey mixed-use development.

Last year, news.com.au reported on nine private owners of 16 apartments in Manly, on Sydney's northern beaches, who banded together in a record deal almost a decade in the making.

The four boutique blocks at 89-90 North Steyne and 90-92 Whistler Street, Manly, were sold in November to a developer for more than A$20m.

- news.com.au

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