A strip off the old block

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A young developer has consolidated his holdings on Queenstown’s most prestigious retail strip. 

Queenstowner Matt Paterson, 34, has bought Eureka House, in The Mall – it’s understood he paid $7 million-plus. 

Hospitality venues, including longstanding Chico’s Bar & Grill, comprise five of its six tenancies. 

Paterson himself co-owns two of those venues, Bardeaux and Minibar. 

Eureka House – which also includes the Eureka Arcade alleyway between The Mall and Searle Lane – was previously owned by well-known local developer and Paterson family friend, John Martin. 

Martin still owns the cinema building next door. 

Paterson also owns Eureka House’s other neighbour, the former H & J Smith department store, which he bought off his family a year after his father Howard – one of New Zealand’s most respected entrepreneurs – died in 2003. 

The new owner redeveloped that building about six months later. 

Paterson is reluctant to comment on the specifics of his new purchase, which was partly brokered by local real estate firm Locations. 

However he says he’d rather buy something in downtown Queenstown than in Auckland’s bustling Queen Street. 

Eureka House, he says, “is in the centre of Queenstown, above the flood line, on the sunny side of the street and in arguably the best mall in NZ”. 

Given the 1860s history of the Chico’s building, redevelopment prospects are possibly limited to the narrow strip between it and the cinema building, which also has to retain a public easement. 

According to the sales blurb obtained by Mountain Scene, the annual rent roll for Eureka House is $369,800. 

That figure, as a percentage of the purchase price, means the rental yield is little more than five per cent. 

That doesn’t surprise local Colliers International commercial manager Mark Simpson. 

“Historically, that prime quadrant of Queenstown’s CBD has attracted some of the lowest yields in the country and that is because it has received very strong capital growth both through underlying value growth but also rental growth,” he says. 

“It wasn’t that long ago where that Mall was $600 per square metre [rental] and it’s now $1300-$1500. 

“Owners that own or know Queenstown CBD property are the ones that have faith in the ongoing capital growth.”