Tourism in Wakatipu fuels market

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Agents marketing two neighbouring central Queenstown properties this year believe the tourism real estate sector is heating up again.

Black Sheep Backpackers at 13 Frankton Road recently sold for $2.7 million after attracting phenomenal interest.

Neighbouring 15 Frankton Rd, meanwhile, is being marketed as an accommodation development site through the innovative use of artist’s impressions.

Local Colliers International tourism broker Barry Robertson had 40 enquiries from New Zealand and Australia for Black Sheep, receiving six contracts before negotiating with the highest bidder, a Dunedin family.

The $2.7m sale price represents an attractive yield of 7.4 per cent, he notes – the property generates $200,000 a year in rental income.

Bidders were attracted by a new long-term lease to an established manager and the property’s location in Queenstown’s dress circle, Robertson says.

“We’ve also had a lot of positive comment recently on tourism figures and numbers into the airport so more people are aware of investing in tourism properties after a hard last five or six years.

“We’re finding some businesses are getting back to the record turnovers of 2007, and the tourism forecasts are all strong.

“We’ve got enquiry for everything from 50-room hotels to hotel sites for 200 rooms, and people are looking at apartment developments again.”

Robertson says he has a good list of investors looking to acquire successful tourism property and businesses similar to Black Sheep.

Robertson and his colleague Steve McIsaac also recently sold 98-unit Shotover Lodge at Arthurs Point to Queenstown Resort College, for about $6.5m.

The college is turning the tourist lodge into self-contained apartment-style living blocks for students, though it intends to use it for worker accommodation in the interim.

The duo has also just brokered the sale of Wanaka’s Base Backpackers to an investor.

Meanwhile, Ray White Frankton agent Wayne Cafe, who is marketing 15 Frankton Rd, also believes Queenstown is ripe for new accommodation development.

Cafe says: “We are back on the front end of that wave again.”

Cafe is selling the property for the family estate of the late Elsie Luckie, whose late husband Tom Luckie skippered the Earnslaw and headed the Queenstown Volunteer Fire Brigade for almost 20 years.

The property’s dimensions, at 1113 square metres, and up to 56m long, are very similar to the 1088sq m Black Sheep block.

The vendor has taken the unusual step of releasing concept drawings showing the scale of development the site is zoned for.

Cafe says: “The property has been on the market before but the vendor felt it was just being represented as an old house in town whereas it is a genuinely well-located development site.

“It’s ideal for an upmarket backpackers or a motel – the sale of the Black Sheep is testimony to the success of this area.

“Accommodation developments in this area are in huge demand.”

Cafe thinks the timing is also good for new accommodation development because he believes a lot of premises like old motels will be turned into long-term staff housing, and the like, unless they’re upgraded.

Cafe says: “One person or a couple could handle this as a development.

“It’s very manageable for a small-to-medium investor.

“But it’s also worth land-banking because it’s not going to get any further away from town – town’s actually going to get closer to it as it grows.”

Tenders close May 15.