The ground lessor's interest in a large landholding in Remuera’s sought-after ‘medical mile’ precinct is up for sale with a rent review next year expected to produce a sizeable increase in its income.
Located at 10 MacMurray Rd, which runs parallel with and is one block away from Remuera Rd, the 1,821sqm site is currently generating annual rental income of $217,000 from a perpetually renewable 21-year lease to CSR Trustee Limited. The lessee operates the Remuera Rest Home and Hospital, a well-established 35-bed facility including 18 hospital beds.
The ground lease incorporates seven-year rent reviews, with the next one due on October 1, 2023.
“Given the substantial increases in land values that have occurred in Remuera since the last review in 2016, particularly in this favourably zoned area, the property’s next owner is likely to benefit from a significant lift in the ground rent,” says Bayleys senior commercial broker Phil Haydock. He is marketing the offering with Bayleys Auckland city and fringe team colleagues Damien Bullick, Alan Haydock and James Were.
“Ground lease offerings come onto the market very infrequently and are keenly sought after when they do,” says Phil Haydock. “This is because they represent the ultimate passive, land banking investment opportunity. Not only is the long 21-year lease an attraction, but because you own the land only, no expenditure is required on building maintenance, refurbishment or insurance.
“Should the lessee default on ground rent payments, then you also have the ultimate recourse of taking ownership of the buildings, albeit as a last resort. The current 21-year lease is also up for renewal for a further 21 years in October next year and should that not be exercised, you would have the options of either reselling the property for development or redeveloping the underutilised site yourself.”
The land at 10 MacMurray Rd is for sale by tender, closing 4pm February 22 at Bayleys House, 30 Gaunt Street, Auckland, unless sold prior.
Bullick says attractive underlying unitary plan and school zonings have helped fuel a more than doubling in land values in the area over the last seven years.
“The site is zoned Business – Mixed Use under the Auckland Unitary Plan which has become operative since the last rent review and allows for a wide range of commercial and/or residential uses up to a height limit of 18 metres.
“It is also located in the sought-after double grammar school zone for Auckland Grammar boys school and Epsom Girls as well as being handy to many of Auckland’s elite private schools. This increases the area’s appeal for residential development which is evident in recent more intensive housing development that has encompassed town and terraced houses and apartments, with the St Marks complex being located nearby on the corner of MacMurray Rd and St Marks Rd.
“This location has also proven popular with medical businesses, with a number of new medical and related developments completed recently.”
One of these is the new MacMurray Digestive Disease and Endoscopy Centre which has relocated to new purpose-built premises at 3 MacMurray Rd from its former premises next door at 5 MacMurray Rd.
Bullick and Alan Haydock sold 5 MacMurray Rd as a 1,765sqm bare land site last year for $8.25 million plus GST (if any). They also sold an 1,821sqm site zoned Business – Mixed Use at 6 MacMurray Rd, with a five-bedroom house and a smaller two-bedroom dwelling, for $10.018 million including GST.
James Were says accessibility is another key drawcard for 10 MacMurray Rd, with the Newmarket Train Station an easy walk away and access to the Southern Motorway only a very short drive around the corner down St Marks Rd.
“The property offers convenient access to the CBD, public transport links, hospitals and neighbouring residential and commercial suburbs as well as being a short walk from the new Westfield shopping and dining precinct and the many shops and restaurants along Broadway.”