Auckland apartment buyers make $100k killing - without moving in

The SugarTree Apartments on Auckland's Union St . Photo / Greg Bowker

Aucklanders who bought apartments off the plans in two big new blocks are re-selling without moving in and making up to $100,000 each after just two or three years, an agency boss says.

Martin Dunn, City Sales managing director, said the re-sales were in the new Urba on Howe St built by Conrad Properties and the new Sugartree between Union St and Nelson St.

"In the last month, we've re-sold about five brand new never-been-lived in Urba units bought off the plans. The original purchasers had made profits in the vicinity of about $100,000 each. The same has happened in Sugartree," Dunn said.

Urba in Howe Street.

"Our last sale on Thursday was a $866,000 Urba place with two bedrooms, views, a study and one carpark," he said - a price well above what the vendor had paid.

"None of these vendors are speculators. Their circumstances changed in the two to three years between paying a deposit and the places being finished," Dunn said.

Dunn said the $100,000 profits were "real money" and not just on paper.

The apartments had been on-sold by buyers who had paid the full price and settled on the deal. Buyers who only pay a deposit were not allowed to on- sell apartments before the buildings were completed.

This restriction is in place to avoid apartment owners competing with the developer who might still be marketing unsold apartments.

Just under 1000 new apartments are nearing completion in the Karangahape Rd/Great North Rd ridge area, Dunn estimated. They are the Hereford Residences on Hereford St and neighbouring The Beresford on Beresford St. Both are ex-office buildings, now being converted into apartment blocks.

None of these vendors are speculators. Their circumstances changed

Martin Dunn

Dunn said although his firm had not sold any, he understood many apartments in the three ex-office blocks had sold for more than six figures each.

"They're all $1 million to $3 million and they're sold out to what we call 'boomer empty nesters'. These people are drawn to the views, the new City Rail Link station, the size of the apartments, the security and perhaps also the changing nature of retail in the area from sex and booze shops to more upmarket brassieres and different activities," Dunn said.

"Now that their houses are worth so much money they're like kids in a candy store. They can buy a bach and they can travel," he said.

The buyers were mainly couples, aged in their 50s and 60s, whose offspring hadleft home and who had often sold larger family homes. They are downsizing, usually leaving suburban areas to be closer to the city where they often work and where they spend time socialising in restaurants, bars, cafes and with friends, said Dunn.

Martin Dunn of City Sales. Photo/Chris Skelton

City Sales has also released its latest auction results which showed:

• The Sun, 602/47 Wakefield Street, Auckland CBD, a studio with 1 bathroom, (no carpark) sold for $205,500.

• Heritage Grand Tower, 1005/22 Nelson St, a studio, 1 bathroom, (no carpark), about 45sq m, sold for $355,500.

• Bankside, apartment 3D at 8 Bankside St, a studio, 1 bathroom, (no carpark), about 30sq m, sold for $266,500.

• City Gardens, apartment 16K at 76 Albert Street, 1 bedroom, 1 bathroom, (no carpark), about 42sq m, sold for $230,000.

• A5/15 Scanlan St, Grey Lynn, 2 bedrooms, 1 bathroom, tandem carpark, about 100sq m for $825,000.

But Herald on Sunday columnist and Newstalk ZB presenter Kerre McIvor considered a unit buying off the plans, then rejected that because she feared she had become caught out by market hype.

"We saw only three before we found the one of our dreams. It hasn't been built - it's still 18 months from completion - but, oh, we loved it. Three bedrooms. Amazing views across the city. A beautiful spacious deck. A scullery. A kitchen mixer.

Watch: NZH Focus - Should First Home Buyers be buying apartment?

"We paid our deposit on the spot and were sent away with a glossy brochure and made an arrangement to see our lawyer. We were in fine spirits last Sunday - intoxicated with a combination of good champagne and the knowledge our new life was just 18 months away," she wrote yesterday.

Shortly afterwards, she worried about what could go wrong and did not go ahead with the apartment purchase: "The scales fell off my eyes".

Dunn predicted she would buy a unit eventually.

The scales fell off my eyes".

Kerre McIvor

"I think it's typical of the depths of change these boomer empty nesters are considering. She's an undecided but I can tell you she will end up in an apartment and she'll love it. She's taken the first tantalising bite and she will come back to it as she has more time to think about. There's no doubt that she will get the money she wants for her Grey Lynn house. This market is not a bubble and it's not a crisis," Dunn said.

Nick Smith, Building and Housing Minister, is due to announce a big shakeup for the apartment sector next month, with proposals to amend both the Unit Titles Act and the Building Act, he said last week.