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    Sep 2003
    High up above and deep down under

    Default Luxury and space in high-rise living - Auckland

    Luxury and space in high-rise living
    5:00AM Sunday October 28, 2007
    By Gill South

    As investors continue to steer away from the Auckland apartment market, the property industry is designing a number of new developments for discerning owner-occupiers.

    These owners want space, quality and service in their urban pads and are prepared to pay for it. And they are not so concerned with capital returns.

    Strong demand is expected for Albert St's Stamford Residences - 149 freehold apartments being built above the Stamford Plaza Hotel.

    Six two-storey loft apartments priced at $460,000 are likely to appeal to executives, says Kelland's Real Estate, which is marketing the 10-storey luxury development. The apartments, with their own entrance from the street, will range from these 55 sq m lofts to a 411 sq m penthouse. Prices will range from $460,000 to just under $6 million for the apartments which will have access to all the Stamford hotel facilities. Kelland's confirmed there is a waiting list for the apartments, which are due for completion next August.

    Larry Murphy, head of the Property Department at the University of Auckland says the Auckland apartment market is moving towards quality as people are prepared to pay for improved lifestyle. They include "Generation Y" types who want to be close to work and where the action is. This renaissance of cities is happening globally, he says. "It is a cultural reaction to the city that is associated with lifestyle," says Murphy.

    Sentinel, a 30-storey apartment block in Takapuna, on Auckland's North Shore, is aimed at the owner-occupier market, specifically baby boomers, says Ian Bensley, sales consultant for developer Cornerstone Group. And they don't want 30 sq m apartments, they want 80 sq m or 100 sq m with quality construction. A penthouse recently sold for $11m.

    Of 115 apartments available, 103 have sold. The remainder cost between $695,000 and $2.5 million and range from 80 sq m to 180 sq m. People started buying three years ago and some have already sold, making good margins.

    Property experts are encouraging first-home buyers, professional executives and empty nesters to look again at the apartment market.

    About two-thirds of Auckland's apartments are owned by investors and it has been a rocky year for those in the lower end of the market. Values have dropped 25-30 per cent, says DTZ's research manager, Ian Mitchell. However, values of better-quality apartments have not dropped, he says.

    Mitchell has noticed a trend for single professional women to buy apartments, as well as younger professional couples and growing numbers of empty nesters.

    Mitchell says Auckland has to lose its reputation for building poky apartments and become closer to the Australian model, where apartments are more like a small house in a building.

    If Auckland takes after other cities around the world, there will be more lower-level apartment buildings attractive to young families and empty nesters alike in the future, he says.

    Even the smaller, boxier ones will have their time again, in the natural course of the cycle, says Mitchell.

    "The values will recover. Auckland has a growing population, and net migration... will pick up again," he says.

    Martin Dunn, managing director of apartment specialist, City Sales, with 23,000 of Auckland's 24,000 apartments on his database, says he is increasingly seeing first-home buyers.

    "I've been getting guys my age bringing in their 25-year-old daughters," he says.

    Dunn says "it's a fact" that people cannot buy houses for less than $500,000, so first-time buyers are increasingly looking at apartments.

    City Sales is marketing a $400,000 leasehold apartment at Princes Wharf and Dunn predicts a "frustrated suburban buyer" will buy it.

    Dunn is optimistic about the future thanks to a new wave of empty-nester buyers looking in the $800,000 to $1.5 million range. There are a number of two-bedroom apartments in Parnell's Fox St, which have been selling for $500,000 and $600,000.

    "They will be approaching $1 million quite soon," he says.

    Dunn adds that good local apartment buildings like the Heritage and the Metropolis are under-priced.

    And a recent auction in which 93 apartments were sold in 72 hours, shows the so-called "apartment crisis" is a myth.

    Sales consultant Damian Piggin, says first-home buyers would do well to look at apartments rather than a suburban do-up for the same price. In-demand apartments, like those in the Highgate complex in Howe St, have appreciated. Piggin sold an 85 sq m unit two years ago for $350,000, and they are now selling for $550,000.

    Places like Highgate "you can't get enough of," says Piggin.

    He is marketing what he thinks is an ideal apartment for a first home-buyer at the 3-year-old Statesman building in Parliament St. The 75 sq m two-bedroom, one-bathroom apartment with a carpark is priced at $399,000 plus an annual body corporate fee of around $3400 a year.

    Martin Morgan, the Auckland Central Franchisee of Open2View.com, and who lives in the popular Ascot Apartments in Newmarket, predicts that young couples who buy apartments as their first homes, will hang onto them, use the equity they have built up to buy their family home in the suburbs, but keep hold of the apartment for their retirement nest egg. "The apartment will become a life investment," says Morgan.

    He is heartened by the fact his apartment is going up in value every year.

    "You get more jealous of your time, you don't have to worry about the maintenance or the gardens, it is all taken care of."

    Morgan says there are good opportunities out there for canny apartment hunters. But he says to make sure where you buy has not got an "inverse ratio of investors to owners".

    "The better the quality of the apartment relative to the competitors, the more chance you have of a) letting it and b) getting capital growth," he says.

    Although most canny investors have learned not to buy off plans, owner-occupiers with specific requirements may well have to do this in the next couple of years as they wait for developments to be completed.

    There are 14 apartment projects currently awaiting approval at the Auckland City Council. Some of the developments expected in the next few years are the Victoria Park Market apartments and Pelago Development's Cook St complex, which is said to include some interesting architecturally designed apartments.

    Westridge will be one of the biggest, according to the council. On Union and Nelson Sts, the proposed mixed development of five tower blocks will include 278 apartments.

    Not all the apartments becoming available will be new. A group of apartments currently attracting strong owner occupier interest are in the popular character apartment market.

    Bayleys is marketing the Heard's building in Parnell Rd which has a small number of penthouses and apartments starting from $1.3 million. With retail on the ground floor and the vintage tiles in the grand entrance, it is "reminiscent of a New York mansion block," says Rachel Dovey, residential manager at Bayleys Real Estate.

    The apartments are attracting buyers from Auckland's eastern suburbs who still want a beautiful home, but one they can lock and leave, says Dovey.

    Unlike apartment owners generally, people who move into character apartments tend to stay put.

    "People love living in them, and will stay in them for a good three, four or five years which is unusual in the apartment market where people often move on to the next bigger apartment with better views."

    Dick Ayres, until recently the head of the apartment group at the Auckland Property Investor's Association, has been publicly against apartments as an investment given the returns. He advises owner-occupiers against buying a studio as a first-home buy but to go for higher quality stock such as that around the Viaduct or Scene or possibly a studio at the Metropolis.

    Ayres, in his late 60s, is a happy apartment dweller, at The First Imperial apartments in Hobson St, opposite St Matthews Church.

    "I would encourage anyone to get into apartment living," he says. "I feel a part of the city. I never felt like that in a lot of places I've lived," he says. "I suspect I will be in the city until the day I die."

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx


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