Sturdy returns on well-located Dunedin property
68 Sturdee Street, Dunedin
• 410sqm warehousing, retailing space, and offices
• Located on 892sqm of leasehold land and zoned industrial
• Corner site with good profile and dual access
• Fully-leased to a well-performing international tenant with a broad presence throughout New Zealand
• Net rental income of $37,765 plus GST per annum and market-linked rental reviews
• Annual ground rental of $16,056 plus GST per annum until 2027, with the ground lease running through to 2041
• National Total Property marketing campaign – for sale by Deadline Private Treaty
• Strong enquiry levels from investors on Bayleys’ databases and directly off the Total Property magazine
• 25 enquiries received within the first seven days
• An acceptable offer in the first week of the campaign, brought the deadline date forward and prompted two other offers
• SOLD for $605,000 at a 6.24% yield
• Purchased by an out-of-town investor
The leasehold land and building housing the Dunedin branch of the world-wide industrial pipe and tube retailer, MRC Global, created a flurry of interest from investors as far afield as Australia when it came on the market.
Zoned industrial and located within Dunedin’s Harbourside Basin Precinct, the well-maintained property’s head lease is owned by Chalmers Properties Ltd., a subsidiary of Otago Regional Council.
Muir Gold of Bayleys Dunedin says historically-low interest rates and a general shortage of well-returning investment options is underpinning a very strong commercial and industrial market in Dunedin.
Local buyers are proving patriotic, while investors from elsewhere in the country are increasingly seeing appeal in Dunedin property opportunities.
“High levels of enquiry and an early acceptable offer within the first week of marketing meant that the deadline private treaty date was brought forward creating a multi-offer situation,” says Gold.
“Three offers were received – with another three interested parties unable to compete due to the condensed timeframe.
“The leasehold status of the property was mitigated by the return on investment thanks to a reputable tenant and favourable lease profile.”
Gold says the price achieved exceeded expectations.
“First-time investors and buyers from outside Dunedin are contributing to an increase in values in the region.”
Representative for the out-of-town vendors, Steven, says Muir Gold’s attention to detail and ability to streamline processes put their minds at ease when selling from a distance.
The Sturdee Street property had been a long-term family investment and it was deemed time to wind things up and release capital held in this asset.
Steven says they took Gold’s advice and guidance on the sales method and were happy to sell by deadline private treaty rather than auction or tender.
“Based on current market dynamics, this method was recommended by the agent and because he’s based on the ground there and we’re from out of town, we were happy to take his advice.”
Admitting that at first, the vendors were unsure of the timing given the recent COVID-19 lockdowns and the uncertainty that entailed, Steven says it seemed that the Dunedin market was still pretty active and the demand from investors was there.
“The sale price achieved was beyond our expectations and because of the competition that the agent and Bayleys created for the property, I would consider we achieved above market values at the time of sale.”
Along with “great communication throughout the campaign”, Steven credited Gold’s extra-mile service in sorting any issues encountered along the way as central to making the process very easy for them as out-of-town vendors.
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