In a supposedly difficult climate for property, especially inner-city apartments, Nigel McKenna has quietly sold half a block he plans to build at the top of Queen St.
McKenna’s residential development company, Melview Developments, has bought a site on Scotia Place, overlooking Myers Park, from Kiwi International Hotel owner Ray Schofield. The apartments will all be one-bedroom but fitted into the space of a studio, averaging only 33sqm.
But he believes the design will give occupants a feel of more space – the 84 units on 12 floors have been offset to give all of them windows on at least two sides. McKenna expects they will prove attractive to investors because of the low price range, $91,500 to $111,000, although there will be no rent guarantees or management scheme in place.
He had a target of getting commitments for 50 per cent of 10 floors. He is keeping the top two floors for the moment, either to capture higher value later or simply as an investment. This week he achieved 38 sales and said construction should start early in the New Year, with completion by the time of the America’s Cup at the end of the year.
McKenna has a spread of property interests. His management company, Promanco Kenman, is handling project management on the Metropolis apartment project for its developer, Andrew Krukziener, and is also in a joint venture to develop Watermark Plaza, the 144-unit block of serviced apartments to be built on the city side of the Viaduct Basin.
Melview has been busy around the suburbs despite the property downturn. The company has been building about 200 townhouses and terraced homes a year. It did 22 on Ambrico Place, New Lynn, last year and has a further 28 under construction there, is doing 14 in the Ponderosa subdivision off East Coast Bays Rd at Browns Bay and has 52 in Wickham Developments’
The Fields subdivision on Oteha Valley Rd, near the Albany Stadium. It has just finished 36 units in Galway St, Onehunga, and will do another 12 there. “On average we should be selling four a week. Last year we did six, this year we got down to two, but six weeks ago I had my best week ever, selling eight. They’re all reasonably low priced, around $179,000 to $229,000.”
The Scotia Place block is priced well below that. McKenna believes he could probably get higher prices than his top figure of $111,000 “but I’d rather just build and sell it.”
He has valuation support from Ian McGowan, a director of Seagar & Partners, saying sales research indicates the Scotia Place units “have a market value excluding carparks of between $110,000 and $148,000” and an indication from marketers Barfoot & Thompson that the units are likely to achieve rents of $240 a week.
“Even at rent of $220 or $230 a week you could get a 12 or 13 per cent return, though it’s not a managed product,” McKenna says. He believes some of the new inner-city apartments blocks have not sold well because they have only one lift, while this building has two lifts in the design.
Externally, the design is unusual. It will be steel-framed, making it cheaper and quicker to build. With three apartments on each side and one on the nose looking over Myers Park, McKenna says it made sense to give the building two faces. On the park side it will have “relatively natural materials, horizontal and vertical timber cladding to relate to the park and give it a domestic feel,” but on the Queen St side it will feature an external staircase, clad with a circular steel balustrade.
Floors will be 75mm-thick polished timber and there are features to compensate for small unit sizes, such as “floating” wardrobes and sliding doors with art work on them to hide the kitchen. “We’re looking to develop the sophistication of inner-city living. A lot of developments have been very basic,” says McKenna. “These are not lavish and luxurious, but they’re going to be good quality.”
