Buzz returns to Queenstown’s apartment scene

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Queenstown’s real estate sector is still buzzing over the promising price fetched at a recent apartment auction.

Pounamu Apartments, on Frankton Road, had been typical of the resort’s distressed managed apartment sector in recent times.

Units that sold in their prime for up to $780,000 were fetching between $380,000 and $420,000 in the past year – an unfurnished one hit rock bottom at $355,000.

But in a mortgagee auction last Wednesday, Apartment 23 went to a Dunedin phone bidder for $492,000.
Southern Lakes Real Estate auctioneer Brendan Quill reels off the stats – 94 bids were placed by seven parties over 43 minutes, starting from $300,000.

“It’s great to be able to provide that result to people who have invested in the marketplace – it shows that despite our strong dollar, Queenstown is still a wonderful place to be buying,” Quill says.

The two-bedroom two-bathroom upper-floor property is arguably one of the best in the complex, but SLRE boss Stephen Hebbend says $492,000 is a very good result for current market conditions.

Local Real Estate Institute spokesman Adrian Snow adds: “It appears as though interest is returning to quality and well-managed apartment complexes.”

Managed apartment activity has been lagging behind the residential property market, which demonstrated “definite signs of recovery in both number of sales and value of sales across the last three months”.

But the managed apartment sector is now showing “some early signs of recovery”, although real estate agents are cautious because there’s not enough data to form a trend, Snow says.

Mountain Scene asked long-time Locations Realty agent Greg Ross for his reaction.

“You only see the bottom once you’ve been there – I think we might have been there.”

The earlier sub-$400,000 prices at Pounamu reflected the market at the time, Ross says.

“There were no buyers, everyone was in shock [after the credit crunch]. They weren’t prepared to take a plunge when [prices] were rock bottom because you didn’t know how much further they might go down.”

Local Ray White salesman Vaughn Mare recently sold three four-bedroom mortgagee apartments at The Beeches on Hallenstein Street for between $601,500 and $768,500.

Those are “very good prices”, he says, but stresses they’re unmanaged apartments.

The three units attracted 91 visits and 21 tenders, and went for about 20 per cent more than they would have a year ago, he suggests.

“I think the campaign with The Beeches really showed usthat people had said, ‘Now’s the time to jump and if we don’t, we’re going to miss out’.

“The bottom of the market was probably about three or four months ago.”

Mare notes stock of mortgagee apartments is drying up.

“Now there’s a whole lot of people who go, ‘Oh s**t, I wish I had bought that one then’.”

There’s also no new stock being built so prices should continue to rise, Mare says.

“It certainly won’t be anything like it was, but I would expect a 10 per cent rise over the next 18-24 months.”
By contrast, Colliers International, in its recent annual Queenstown market report, stated managed apartments had dropped 20-60 per cent in price during the past 18 months.

The next chance to test the pulse of this sector will come on October 29, when Bayleys auctions two three-bedroom units at ZQN Apartments, on Hallenstein St, on behalf of receivers.