22 Hallenstein featured in a ‘ Mountain Scene ‘ Article As The Only Viable New Development in Queenstown- ONLY 5 APARTMENTS STILL FOR SALE

Date: 16th September 2013 by Tim Medland

In its August 22, 2013 feature on Queenstown Real Estate, the free local paper “Mountain Scene state states (Excerpt) – “Turning to apartments, the fact that so many are selling for prices at or below replacement cost will discourage new developments, Bayleys Research says”. An exception is a 17 unit central Queenstown development on Hallenstein Street, called 22 Hallenstein and co-developed by local Tim Medland – “it has achieved good pre-sales off the plans” Bayleys says”.

It is very interesting indeed that Bayleys should single out this development as ‘bucking the trend”. Naturally this begs the question, what are the essential ingredients in this development that have allowed the developers and sales team to achieve such results in a market which by all accounts has not been favourable to apartment sales? Delivery is on track for December 2013 .

A combination of factors has led to what could be regarded as the gradual demise of the apartment market since the start of the GFC. The same Mountain Scene article also notes that”…serviced apartment owners are pulling out of management pools to try to seek higher returns through alternative letting options.” But how did we get to this situation? You will find the answers below.

As the Queenstown Real Estate Market heated up very quickly in the post 2000 ” Millenium ” period, thanks to the low New Zealand Dollar combined with NZ’s “safe haven” image and an ever growing shortage of dwelling supply (to name just a few of the driving factors at the time), developers were lured by the promising gains potentially available in big apartment complexes.

Inevitably this was going to lead to the “Apartment Gold Rush” that we witnessed from 2003 right up to 2009 with the completion of the Rees development. One of the immediate side effects of this oversupply of apartments for the Queenstown region, was a drop in value, added to critical competitiveness in renting out these dwellings.

Body Corporate fees , at often $10,000 to $12,000 per apartment , and an unfair percentage of the annual running costs being borne by the apartment owners rather than the Hotel operating company , made the financial returns too low and ownership costs too high.

As the “hotel style” management companies started folding under the pressure of low occupancy, others were sued by owners for not delivering on their minimum percentage income guarantee (often 4%) as most of them tried to kerb the shortage of bookings by dumping their products on worldwide discount accommodation websites like wotif.com.

In this environment the new developer had to come up with a concept that could solve all the problems with apartment concepts of the past 10 years. The business model simply had to change. It is no accident that 22Hallenstein has enjoyed such fast sales results, as they fit a perfect gap in the apartment investment market in Queenstown, ticking all the boxes.

* Box 1: Small size development with a better sense of community.

* Box 2: Freehold with low body corporate fees (as low as NZ $1500 per Annum), thus not affecting the owners’ return on investment.

* Box 3: A range of prices that are well below average for apartments of this size, in fact 22 Hallenstein is extremely competitive regarding replacement cost for most of its dwellings.

* Box 4: A unique design and small number of dwellings that protect the investor against competition in case they want to sell in the future.

* Box 5: The all-important “walk to town” location that all buyers search for but seldom find

For more information and to find out why this development has met such success in the past six months, to the surprise of the Queenstown Real Estate fraternity, go to www.22hallenstein.com and see for yourself.

 

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