Hamilton City Council's controversial inner-city Victoria St buildings are now worth $2.37 million less than the $6.49m ratepayers forked out for them almost three years ago.
The latest independent market valuation of the properties between 242-266 Victoria St put the total value of the buildings at $4.12m, according to reports released to the Herald under the Local Government Official Information and Meetings Act.
The value of the properties even dropped below the 2018 market valuation of $4.3m. Both independent valuations were carried out by Telfer Young.
And the council has only seven years to do something with the buildings before it is contractually obliged to sell two of the three back to the previous owner at the market values, which are currently well below the purchase prices.
The latest market valuation, carried out in June last year, valued 242-254 Victoria St, whose tenants include Mexico, at $2m despite council paying $3.4m for it.
260 Victoria St has a valuation of $650,000 compared to its $790,000 purchase price and 266 Victoria St is valued at $1.470m despite council paying $1.95m for it.
At the time of purchasing the properties former mayor Andrew King dismissed suggestions the council had paid too much for them, maintaining it had paid the same amount as anyone else would have if they had gone to market,
Telfer Young noted in its report that the CBD retail market was soft particularly with hospitality tenants being most affected by last year's lockdown. The overall value of the properties has dropped $180,000 since the 2018 market valuation.
Hamilton deputy mayor Geoff Taylor, who supported the buildings' purchase, said they had great potential and while nothing had been decided he believed the city had moved on from King's vision to bowl them to create a large inner city park.
"I don't know if we paid too much. What I would say is that they are going to be worth one hell of a lot more once they are developed."
Taylor said discussions were still underway about the exact plans for them but believed it would help open the city to the river. He said there was value in redeveloping them, not bowling them.
"That whole cultural precinct area is going to look amazing from the museum all the way up from the hotels - it's all part of that whole picture."
Hamilton mayor Paula Southgate said while she didn't agree with the way the buildings were purchased, including what they paid for them, the city was stuck with them and needed "to make them work hard for the city and bring about some tangible results".
"They are such a strategic asset that we don't know what we are going to do with them in the future, but they represent a huge opportunity to pull the CBD through and potentially upgrade and use them for ways that bring money back to the city through hospitality and commercial use and some refreshment of our riverside activities," she said.
"I would like to see it as the phoenix that rises up from the ashes and becomes a really brilliant opportunity."
In the meantime some of the ageing buildings are in need of repairs, and not all are tenanted.
Both Southgate and Taylor believed the council will do something with the buildings before they were contractually obliged to offer two of the buildings back to Hamilton developer Matt Stark at market value.