Investors in CBD take a beating

By Christine Nikiel

Friday 2nd August 2002

Investors in Auckland University's Railway Campus have seen their investments slashed after recent auction sales failed to reach even reserve prices.

The student apartments, built in 1998 by Auckland developer Jim Speedy's Covington Group, have been selling for well below their true value, marketer Martin Dunn of City Sales said. Mr Dunn said one unit recently sold for more than $90,000 less than its original price. One unit, bought for $142,000, sold for $49,000, another bought for $161,000, sold for $82,000. A third apartment sold recently for $67,000 after its owner paid $135,000 for it two years ago.

"Those prices are all the market will recognise at the moment," Mr Dunn said.

Meanwhile, Mr Dunn, who also markets the troubled Takapuna hotel/apartment tower, Spencer on Byron, said he was urging owners to cancel leases where they could, so the tower could become fully residential. Investors in Spencer on Byron, also developed by Covington, have seen their guaranteed returns of up to 8% cut in half after the hotel operations' manager, US-based Castle Group, suffered low hotel room occupancy rates.

Castle blamed September 11, international airline problems and a drop-off in tourism.

The dismal returns in the Spencer on Byron and the Railway Campus mirror those suffered by investors in Auckland's Metropolis tower. The high-profile tower is gradually reverting from a mix of hotel rooms to just apartments, due to poor returns from hotel guest occupancies.

A reseller of Metropolis apartments, Mr Dunn said apartments were selling at 60-70% below their true value, with one owner recently suffering a $400,000 loss. Meanwhile, Metropolis developer Andrew Krukziener is tight-lipped about his plans for another apartment development in Quay St's Union House.

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