The rear section was on its own title and could be developed separately from the established building at the front, giving investors and developers several options.
The main building had two retail premises on the ground floor with a spacious four bedroom flat above,
All up the property was providing net rental income of $36,386 pa (plus GST), however Paul Cudby of Bayleys Capital Commercial, who marketed the property with his colleague Andrew Smith, said they believed there was potential for the rental income to be increased $66,678 pa.
However the character building would likely require additional seismic strengthening work estimated to
Additionally the section at the rear could be developed and zoning allowed for a building up to 10 metres high with a floor plate of 175 square metres, which would allow a boutique apartment development.
Potential buyers could choose to either keep the existing building with the possibility of selling the rear section at some stage, developing the rear section or redeveloping the entire property.
Cudby said there was substantial interest in the property with half a dozen serious bidders when it went under the hammer.
It was purchased by two business partners with complementary skill sets, one who will develop a building on the rear section while the other refurbishes the character building at the front.
Details of other recent investment property sales from around the country are available on our Commercial Property Sales page.
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2 Comments
Hidden fault lines are forming ...
With many residential real estate investors moving into commercial real estate (due to higher net yields), there are some potentially large hidden fault lines forming here in investment property portfolios, especially if these property purchases have been financed using interest only loans. This is a potential source of hidden risk with respect to residential property prices.
In a recession, businesses cut costs and close some retail space, some businesses go bankrupt, leading to commercial property vacancy increases and commercial landlords losing tenants. If banks ask commercial property investors to stump up additional cash (as the building value as fallen and to reduce LVR levels) then property investors may be forced to sell their more liquid assets to raise cash to meet the cash demand.
Sometimes that more liquid asset may be one or more residential investment properties being sold at a distressed price due to the urgent need of the cash proceeds ..
Now if the residential investment property portfolio is above the LVR of 65%, and the borrower is cross collateralised, then the bank may choose to keep all the sales proceeds to reduce debt until the LVR goes below 65%. Since the property investor does not receive the necessary cash, this may entail the property investor having to sell more properties than they originally intended. If sufficient numbers of property investors are in this position, then the supply of residential properties coming onto the market at the same time could put downward pressure on residential property prices.
Refer:
1) residential property investors moving into commercial - https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=12…
2) problems you can get into with commercial real estate when the banks want additional money to lower the LVR - https://www.propertytalk.com/forum/showthread.php?39251-Loan-To-Value-D…
I’m sure the 130K seismic upgrade will be wishful thinking as will the doubling of rental income
I know Petone well & unimpressed last time I walked the Main Street around 5 yrs back.
Really the whole strip of shops requires tearing down & rebuilding in my opinion
It hasn’t seen the care that Wellington’s CBD has ( which is beautiful on a sunny day )
Great seaside suburb Petone let down by ugly old unkempt shopping strip in my opinion of course
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