Bayleys Dunedin office and Bayleys Auckland based International Division have joined forces in the sale of Quest apartment hotel in Dunedin for $6,300,000 to an investor from mainland China.
The 42-apartment hotel located on a 1012 sq m site with 26 carparks in Cumberland Street in the central business district of Dunedin, in the southern South Island, was sold as an investment property with a 10-year lease from 2012, plus three five-year rights of renewal, to the hotel’s operator QD Apartments Ltd.
The property was sold by Robin Hyndman, a director of Bayleys Dunedin, in conjunction with Bayleys’ International Division, to a Beijing businessman, with an engineering consultancy employing around 500 people, who was making his first investment in New Zealand.
Bayleys International Sales Manager James Chan says the buyer was attracted by the high income yield of 9.2% on the property’s annual rental income of $580,000 - a much higher yield than he would have been able to secure on a property of similar quality in China. Other attractions were the property’s long lease which also required the tenant to pay for all of the building’s operating expenses - as is typical with most New Zealand commercial property leases - and provided fixed rental increases of 2% a year.
“The sale was helped by the fact that a lot of the ground work had already been done before on the property on behalf of another Chinese investor who had shown interest in the property but decided not to proceed with the purchase,” says Robin Hydman. “We were therefore able to refer the new buyer to the lawyers and accountant who’d acted for the previous interested party.
“It meant we didn’t have to start the due diligence process from the beginning again and it ended up being a smooth sales process. All parties were very happy and the new owner thoroughly enjoyed his time in Dunedin and appreciated the professional services we provided. He indicated he intends to buy more commercial property in New Zealand.”
Bayleys’ International Director Chris Bayley says there is currently strong Chinese investment interest in tourism related properties particularly strongly located offerings on sites that have future redevelopment potential.