A leasehold apartment provided a surprising star turn in the latest sales results form Colliers and City Sales

A leasehold apartment in downtown Auckland was the star of the show at this week's City Sales auction, providing its new owner with a better yield than many commercial properties.

The apartment was one of three put up for auction by City Sales this week and there was competitive bidding on all three and they all sold under the hammer.

But it was the leasehold apartment in The Docks building that stood out.

Leasehold has been well out of favour with both owner-occupiers and investors lately because of the effect that rising land values have had on ground rents, which has seen prices for many leasehold units fall through the floor.

The leasehold apartment in The Docks complex in the Britomart precinct that was offered this week was at the better quality end of the scale, with a floor area of 69 square metres, two and half bedrooms and a car park.

It sold for $270,000, a substantial discount to the $398,000 the vendor had paid for it in 2009, but it was rented at $630 a week which provided a gross rental yield of 12.1%.

Once rates of $1853 and the body corporate levy (including ground rent) of $11,711 were allowed for, the yield would reduce to 7.1%, which is well above the returns most freehold apartments have been achieving and comparable with the net yields on many commercial properties.

The net yields on commercial property sales reported by Colliers International this week ranged from 5.8% for a retail property on the North Shore to 8.3% for an office building with government tenants in Tauranga.

 So even though property prices are tending to rise faster than rents, properties that can provide reasonable income returns are still out there if people are prepared to look.

See below for the details of Colliers' recent commercial property sales and this week's auction at City Sales.

Recent commercial property sales by Colliers International:

• 40A Arrenway Drive, Mairangi Bay, North Shore. A retail unit operating as a cafe. Sold for $950,000 providing a yield of 5.8%. The agents were Euan Stratton and Jimmy O'Brien.
• 48-50 Stonedon Drive, East Tamaki, Auckland. A vacant, 3700 square metre industrial property. Sold for $4.85 million. The agents were Andrew Hooper and Paul Higgins.
• 94 Grey St, Tauranga (pictured). A 2113 square metre office building with basement car parking on 1686 square metres of land. Leased to government tenants ACC and CYFS. Sold for $6.1 million providing an 8.3% yield. the agents were Simon Clark and Duncan Woodhouse.
• 638 Great South Rd, Ellerslie, Auckland. A partially leased 638 square metre office building with 21 car parks. Sold for $1.71 million. The agents were Kris Ongley, Peter Kermode and Michael Van Der Putten.

Recent Auckland apartment sales by City Sales:

• 1004/85 Wakefield St. Tetra House. A 40 square metre, two bedroom, furnished unit with balcony. Vacant. Rates were $1298 and the body corporate levy $4282. Sold for $338,000. According to QV.co.nz the unit was last sold for $200,500 in 2009. The agent was Maryanne Wong.
• 902/421 Queen St. Kiwi on Queen building. A 48 square metre, three bedroom unit with Juliette balcony. Vacant. Rates were $1113 and the body corporate levy $$4721. According to the auctioneer the unit needed some TLC. Sold for $380,000. According to QV.co.nz it was last sold for $210,500 in 2009. The agent was Habeeb Urrahman.
• 724/8 Dockside Lane. The Docks building. A 69 square metre, two bedroom plus study unit with a car park rented at $630 a week. Leasehold. Rates were $1853 and the body corporate levy $11,711 (including ground rent of $5225). Sold for $270,000. According to QV.co.nz the unit was last for $398,000 in 2009. The agent was James Li.

Our free Property email newsletter brings you all the stories about residential and commercial property and the forces that move these huge markets. Sign up here.

To subscribe to our Property newsletter, enter your email address here. It's free.