A mix of small industrial, commercial & retail sites attracted rapid-fire bidding and yields down to 4.1% at a Barfoot & Thompson auction yesterday.
The first property up for sale, a standalone retail offering in Mt Albert containing an ASB Bank branch & a real estate agency, set the tone when the yield went under 6%.
On the next one, a single-level building at the top of Parnell Rd containing 3 longstanding retail outlets, with rent of just over $118,000, bidding started at a cool $2 million and ended with a battle between an Asian investor and the owner of the neighbouring property, local investor & developer Paul Doole. It was Mr Doole who stayed the distance. The yield on current rent was 4.1%, but the property’s in an area where redevelopment has been occurring.
Surprisingly, given the strength of bidding on those 2 properties, the next one – a vacant industrial & office property in the Mackelvie St transition zone of Grey Lynn – was passed in at $1830/m² of land.
The second property to sell at a very low yield (4.2%) was a 2-storey brick building in a high-profile Manukau Rd position which could require a large spend to meet earthquake code compliance. Despite that, it attracted several potential buyers.
As one developer commented to me when the hammer dropped on that sale: “We’ll be down to 1% soon. You can’t make any money on this!”
It was hard to see investment sense winning over emotion at such a strong yield on a building needing work, but the redevelopment prospect for the Parnell property would give a different picture.
Published 11 May 2012
Bob Dey report