Cup fever could get landlords carried away

July 1, 2007

Property expert Andrew King would like nothing better than for the Auld Mug to arrive back down at the Viaduct.

But he, like other investors and estate agents, warns against the temptation to take a punt, borrow heavily and invest in a clutch of Auckland apartments within walking distance of the Viaduct.

“There’s a lot of talk among property investors at the moment and they’re quite excited about it,” King said. “They think it [winning the America’s Cup] will increase property values.”

But a decision to invest in inner-city property needed to be put in context, he said.

“It is just an event over three or four months. To base an entire investment decision around an event which is so short term, I think, would be a little unwise.”

Property investors say that there will be a great deal of hype surrounding the America’s Cup and Rugby World Cup, and people need to be very careful not to get carried away.

Already real estate agents are catching Cup fever. Ray White estate agent Zoan Jovanovic is advertising a $799,000 Mairangi Bay house under the heading “America’s Cup Bonanza”. He invites househunters to relax on the deck, which has views over the Hauraki Gulf, and watch the “potential America’s Cup … ”

Property experts say people who own apartments available for rent near the cup base will do extremely well for several months, before, during and just after the Cup challenge.

But they will not be able to sustain high rents once the event is over, they say. Real estate agents warn of people who had got “burned” after the last America’s Cup.

However the owners of large three- to four-bedroom apartments – difficult to find in the downtown area – and large family homes near the cup base will do well, they say. Syndicate families would rent a property for between 12 months and three years.

Auckland apartment investor Ed Meilie said those considering investing in an apartment should buy good quality. During the last America’s Cup, Meilie rented his apartments to various yacht syndicate members for between 12 and 18 months.

While Meilie’s rents rose by between 20 per cent and 30 per cent during the build-up to the America’s Cup, they were nothing like the 100 per cent claimed by some.

“The syndicates aren’t stupid. When they rent an apartment they’re not going to pay double the price, especially if they’re eight months early,” he said.

Meilie, who has invested in apartments for the past 12 years, always advises people to buy good quality in whatever category – be it a studio or three-bedroom apartment. Investors who bought cheap apartments – the tiny, two-bedroom 40sq m student apartment – would not benefit.

“Stay a mile away from them.”

Good apartments were still easy to rent after the Cup. The international market became more aware of Auckland so the owners of good apartments would benefit.

Real estate agents and investors agreed that rental accommodation would be in high demand during the main America’s Cup months. Demand would outstrip supply, which meant landlords and apartment owners would be able to charge whatever they could get away with.

Gail Vietri, principal of Quinovic (Ponsonby), a residential property management company, said good apartments for rent were already in short supply over the Christmas summer period and any demand from America’s Cup syndicates would drive rental prices up further.

Rental boom

It’s early days, but should the wind shifts and Lady Luck go Team NZ’s way this week, Auckland could be hosting the 33rd America’s Cup four years from now.

Aucklanders with homes within easy driving distance of Viaduct Harbour could, as they did during the 2000 and 2003 Cup challenges, make a killing by renting out their properties. Rents doubled or even trebled during the lead up to the cup.

Letting agents say the yachting syndicates will want to rent large, good quality, fully furnished homes. Three or more bedrooms will be essential, both for families and for eight to 10 syndicate staff to share one home. The houses need to be near good schools, and preschools, and syndicate families will want to know if there is room for their children in those facilities. They will favour areas that are quiet and safe.

The homes will need to be within either walking distance or easy driving distance of downtown. Homes in St Marys Bay, Herne Bay, Freemans Bay and Ponsonby will be at a premium. Suburbs such as Grey Lynn and Pt Chevalier will also be popular.

Along the waterfront, homes in Parnell, Orakei, Mission Bay and Kohimarama will be in demand.

Those renting will expect Sky TV, a good internet connection and all maintenance, such as lawns, gardens and swimming pools, to be taken care of.

The rents for good homes could easily double, agents say. For instance a four-bedroom Orakei home, which normally rents for $1300 a week, could command $3000 a week if the America’s Cup comes back to Auckland.

Sailors renting one-bedroom apartments will expect the latest technology, including digital TV and good internet access. They will want to be within walking or biking distance of the base.

The apartment will need to be quiet and dark so that sleep is not interrupted.

Viaduct living

Good apartments in popular buildings such as The Point at Auckland’s Viaduct, close to where the action will be if Team New Zealand defends the Cup in 2011, don’t often change ownership.

Real estate agents say owners love living at the Viaduct and are reluctant to move. The good penthouses, some worth between $2 million and $3 million, rarely change hands.

But there are still plenty of apartments available to buy. A studio or one-bedroom apartment can be bought for $280,000 in Latitude and in North at the new Lighter Quay.

Agents say property prices might increase from 5-10 per cent leading up to the America’s Cup.

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