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Earthquake-damaged apartment buildings are still in demand, agents say, as one of Christchurch’s last big “as is, where is” hits the market for sale.
The owners of the Madison Apartments on Durham North Street are selling all 40 apartments in the complex after finally settling with its insurer 12 years after the 2011 quake.
During Christchurch’s rebuild, many apartment complexes have been snapped up by developers, investors, or property traders who have bought them for multi-million-dollar sums before fixing and flicking them off one-by-one for a profit.
Colliers investment sales broker Courtney Doig, who is marketing the property, said most of the ‘as is, where is’ apartment buildings have already been repaired and the apartments sold off.
She has been involved in 16 sales of ‘as is, where is’ apartment buildings and believed this was the last large, unfixed apartment building left in the CBD.
Doig said it had been a lengthy process getting to the point where the body corp had decided to sell as all 40 apartments were individually owned, but they were now ready.
“When you are dealing with that many owners it’s obviously takes longer with insurers to get to a resolution, so it’s been quite a drawn-out process.”
The apartments are all occupied with some 25% of the apartments owner-occupied and the remaining 75% tenanted.
“There’s quite a mix of people living here with different situations. For some, the Madison was their first home and now they have young children and need something bigger, others are retired, and there are some people who rent.”
The apartments ranged from one to four bedrooms with the bulk being three-bedroom apartments, They also had the unusual advantage of having two car parks each, she said, whereas the new apartments and townhouses being built around the city either have no car park or just one.
“It’s in a really nice quiet pocket of town so the location coupled with the residual improvements will appeal to those that are looking for a value-add project.”
The property is being sold by deadline private treaty closing 23 November and Doig said a huge amount of information on the condition of the building was available to any qualified buyer.
In 2021, a low-rise apartment complex, commonly referred to as Wilton Close, sold. The complex also had 40 apartments – although only 37 were included in the deal – and was dubbed the most significant ‘as is where is’ body corporate in Christchurch to be put up for sale since the earthquakes.
Doig said there continued to be strong demand from buyers for ‘as is where is’ apartment blocks. They attracted both residential and commercial investors who either repaired them and held onto them, or repaired them and on-sold them usually to individual owners.
Bayleys Canterbury investment sale specialist Angela Webb said it still amazed her that there were still ‘as is, where is’ buildings coming to market so many years after the earthquake and doubted there were too many large apartment blocks left.
While the ‘as is, where is’ apartment complexes were usually hitting the market for the first time after going through a complex process with the Body Corporate to reach the decision to sell, she said the ‘as is, where is’ houses were usually on their second sale after being bought five or six years ago, tenanted and forgotten about until now.
The main buyers for the damaged apartment complexes were large-scale property traders, builders, or developers who refurbish them and then sell them off individually, she said.
“Because of the advances in technology in terms of the fixes that have been developed since the earthquake, the buildings that were damaged can be fixed a lot easier than they could say 10 years ago so that has meant they can buy them, fix them and put them back on the market individually.”
An apartment complex on Bealey Ave apartments, which comprises 42 apartments separated into two blocks, was picked up by developers several years ago for $5.16m before it was fixed up, refurbished and sold off individually for prices ranging from $324,000 to $590,000. Some of the owners who bought the finished apartment in 2021 are now looking to sell again.
While the end profit might seem large, Webb said there were a lot of costs involved ranging from consents, engineering, refurbishment, and holding and financing costs.
“For the whole complex to be fixed and insurable and mortgageable because the bank lending doesn’t lend very easily against ‘as is, where is’ then it would take some time to get it to that level.
“There’s a huge amount that has to go into them…before they can actually fix them up and get them signed off.”
In Auckland, a multi-million-dollar luxury apartment complex on Bute Road, in Browns Bay, is being sold in a mortgagee sale.
The listing on OneRoof said that JLL had been appointed by the mortgagee, China Construction Bank (NZ), to offer apartments and associated car parks at the 33-unit The Victor development for sale by tender, closing November 29.
While another buyer picked up an unfinished six-storey development at 468-472 Manukau Road, in Auckland’s Epsom, sold in a mortgagee sale in August. Epsom Central had been for sale since the start of the year and the new owner was linked to the company that held the mortgage over the building.
-By Nikki Preston
OneRoof.co.nz
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