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Hotel suites turned into apartments to beat tourism downturn
Jazial Crossley | Wednesday June 24 2009 - 07:59am
In an effort to buffer the cold bite of the tourism downturn, owners of 81 Spencer on Byron hotel suites are seeking to turn their investments into apartments to secure longer term tenants.
Across the hotel sector, room occupancy levels have sunk as much as 20%.
At Takapuna’s Spencer on Byron hotel, owners of 81 suites are applying to North Shore City Council to change the classification of the hotel rooms to be dual residential and hotel, to be rented out on a more permanent basis as apartments.
Dual residential use already applies at Auckland’s Quay West on Albert St and City-Life on Queen St and Wellington’s Grand Mercure Wellington Century City Apartments.
“When the original resource consent was sought for the Spencer on Byron only a limited number of penthouses were to be used for residential purposes – all of the other units could only lawfully be used as hotel units,” North Shore City Council team leader of specialist planning Steve Goeldner told NBR.
“Resource management issues of traffic generation, traffic safety and parking together with diminished on-site residential amenity are of most concern, with the separate issue of the continued operation of the hotel on the site also raised.”
Only 38 of the 81 suites have car parks, so North Shore City Council is seeking $25,000 for each additional public car park needed as a result of new long term residents in the area.
The $70 million hotel was built by Multiplex and developed by Jim Speedy’s Covington, now renamed Charco, for landowner Oenone Spencer.
The suites that could soon be apartments are studios at 29sq m without a deck and 49sq m suites with decks between three and six metres.
Qunivoic Property Management rents out suites in hotels such as Heritage Towers, Sebel and Stamford Residences on a long term basis through its website apartmentsonline.
Principal Trevor Giles said that the most likely reason more hotel suite owners hadn’t done the same is because of GST issues.
“Some owners opt to lease their apartment back to the hotel and enter a contract, which has the unit rated GST neutral,” Mr Giles said.
“This is a commercial arrangement and the property is treated as a commercial entity. The hotel offers a fixed rate of return and some investors find this of value under their current financial structure.”
When the suite becomes dual residential long term tenants would be living there under the Residential Tenancies Act as in any rental home. The owner is then liable to pay the GST portion of the property’s current value.
While property values remain low, now could be a good time to make the switch.
“In a depressed selling market it may be a good time to change the status of the property and the entity it is held in so as to clear the GST portion while the property would value significantly lower,” Mr Giles said.
Spencer on Byron general manager Greg Remmington did not respond NBR’s questions.
Submissions to the dual residential suite proposal close July 6.
Jazial Crossley | Wednesday June 24 2009 - 07:59am
In an effort to buffer the cold bite of the tourism downturn, owners of 81 Spencer on Byron hotel suites are seeking to turn their investments into apartments to secure longer term tenants.
Across the hotel sector, room occupancy levels have sunk as much as 20%.
At Takapuna’s Spencer on Byron hotel, owners of 81 suites are applying to North Shore City Council to change the classification of the hotel rooms to be dual residential and hotel, to be rented out on a more permanent basis as apartments.
Dual residential use already applies at Auckland’s Quay West on Albert St and City-Life on Queen St and Wellington’s Grand Mercure Wellington Century City Apartments.
“When the original resource consent was sought for the Spencer on Byron only a limited number of penthouses were to be used for residential purposes – all of the other units could only lawfully be used as hotel units,” North Shore City Council team leader of specialist planning Steve Goeldner told NBR.
“Resource management issues of traffic generation, traffic safety and parking together with diminished on-site residential amenity are of most concern, with the separate issue of the continued operation of the hotel on the site also raised.”
Only 38 of the 81 suites have car parks, so North Shore City Council is seeking $25,000 for each additional public car park needed as a result of new long term residents in the area.
The $70 million hotel was built by Multiplex and developed by Jim Speedy’s Covington, now renamed Charco, for landowner Oenone Spencer.
The suites that could soon be apartments are studios at 29sq m without a deck and 49sq m suites with decks between three and six metres.
Qunivoic Property Management rents out suites in hotels such as Heritage Towers, Sebel and Stamford Residences on a long term basis through its website apartmentsonline.
Principal Trevor Giles said that the most likely reason more hotel suite owners hadn’t done the same is because of GST issues.
“Some owners opt to lease their apartment back to the hotel and enter a contract, which has the unit rated GST neutral,” Mr Giles said.
“This is a commercial arrangement and the property is treated as a commercial entity. The hotel offers a fixed rate of return and some investors find this of value under their current financial structure.”
When the suite becomes dual residential long term tenants would be living there under the Residential Tenancies Act as in any rental home. The owner is then liable to pay the GST portion of the property’s current value.
While property values remain low, now could be a good time to make the switch.
“In a depressed selling market it may be a good time to change the status of the property and the entity it is held in so as to clear the GST portion while the property would value significantly lower,” Mr Giles said.
Spencer on Byron general manager Greg Remmington did not respond NBR’s questions.
Submissions to the dual residential suite proposal close July 6.
