Apartments

[AMR]

Been a while since the last post here.

IMO still an overhang in the market, but once that's gone, prices will rise due to zero new supply entering market. Even the shoeboxes.

[peat]

Especially the shoeboxes. it may take a while but if shoebox demand grows then there just wont be any new supply at all to match it. quite straightforward to figure the markets response to that situation. regulation generally affects markets - and often not in the way the regulators intended.

[Dr_Who]

Just watch the body corporate clauses and costs. Dont touch leasehold.

[AMR]

Peat you sound like you have some experience with this. Have you been buying lately? Which buildings are you keen on?

[peat]

AMR
I own and live in a AKL CBD apartment (not a shoebox , but a large studio) so I am interested in the market to some extent. I only have the one though, so I dont have a landlords perspective, just what I see going on around me.
Prices never really dropped much in my building, and that statement is based on actual sales. Rental demand remained strong - there was occasionally a ' for rent ' sign go up but never for long.
But its an east side 'character' building so I think that makes a difference as they dont tend to build true character anymore.

re the small apartments , while there may be some financing issues i.e larger deposits are required if using bank financing, I just think that in the largest city in NZ there will always be a market for cheap accomodation especially central and so if the rules prevent any more being built then demand is likely to at some stage outstrip supply supporting rents and prices in reasonable buildings no matter their smallness.
No one wants to live cheaply on a permanent basis but some people choose to while they eg study or save for other things. A number of landlords on this website have said that its best to own cheaper buildings as the yields are better.... so it might not be wrong to apply that to apartments as well.

[Arbitrage]

I think you will find that a lot more of the character apartment buildings on the east side of Auckland cbd are occupied by their owners. This usually means the buildings are better managed and the apartments values are more stable.

The "shoebox" apartments were often designed for student type accommodation. When the downturn in the language schools intakes occurred, the values of many of these apartments plummetted as they sat empty. I attended a recent auction of some of these and there was mayhem as bidders were valuing them on rental yields which appeared quite high. However i wonder about how long these will be sustained. I also wonder how much major mantenance (ie cost to owners) will be requred in the medium term for some of these blocks. Some of the buildings are alearedy looking run down.

No wonder the banks are being cautious.

[AMR]

Yea a whole pile of shoeboxes on Hobson and Nelson Rd. Would prefer to buy a nice character apartment as well but the yields on them don't look as good.

Looking at one in the Ascent at the moment, just turned down on on upper queen st.

[Dr_Who]

Becareful very with older character buildings. Due to their age the maintenance cost is very high. One example is the old hydraulic lifts that constantly breaks down. To replace an air cond unit for a 10 story building cost over $100k.

[Arbitrage]

Yes that is right about maintenance. Also some of the old commercial buildings that were converted to apartments. The walls and floors aren't as soundproof as the old purpose built apartment blocks.
Two suggestions.
First, before you buy ask for a copy of the minutes of the last AGM of the body corporate. These can give you an idea of any issues plus look at the accounts for a decent sized sinking fund for future maintenance.
Second, make contact with a building manager of one of the apartment blocks and ask if there are any issues with the building you are interested in. Most of them know each other and they talk fairly regularly about building problems. Some of the buildings managers contact numbers are in the phone book under the building name.

[CJ]

The walls and floors aren't as soundproof as the old purpose built apartment blocks.

Or they could be better. I use to live in Brooklyn apartments and I swear the walls/floors were a solid 1 foot thick concrete. Some of the character conversions might not be the same though.