REGIONAL REVIEW: DUNEDIN THE POPULATION IS DUNEDIN GROWING IN DUNEDIN DUE TO EMPTY-NESTERS AND FAMILIES MOVING FROM AUCKLAND FOR A MORE AFFORDABLE EXPERIENCING LIFESTYLE. GROWTH The affordable investment market in Dunedin is in a growth phase, writes Jenny Keown. AFTER SUFFERING AN ECONOMIC DECLINE Stringer says empty-nesters and families over the last decade, Dunedin is clawing are relocating from Auckland to live in its way out of the doldrums with a buoyant Dunedin as central Otago appeals for its property market, building boom and affordable lifestyle, and good schooling. workforce expansion. Mana Property Management director In July last year, investors from Kyle Elmer says tenants tend to be a mix Auckland and Central Otago turned their of young professionals, who are often eyes to Dunedin when the 40% loan-to- graduates of the University of Otago, value restrictions were introduced. families and some students (although Harcourts Dunedin manager Richard they don’t make up a large part of his Stringer says Otago stands out as it is such tenancy portfolio). an affordable base, and there is real growth Most tenancy agreements tend to in Dunedin. be one-year fixed terms, and the young These thoughts are echoed by QV professionals will often renew after national spokesperson Andrea Rush who one year. On the question of whether says the latest QV house price index shows the transience of the rental market is a value growth in Aukcland, Hamilton challenge for investors, Elmer doesn’t and Christchurch continue to ease, while think so, as long as investors get their values are rising in Tauranga, Wellington numbers right. and Dunedin. “Investors get caught up thinking Dunedin’s median price rose to they can rent higher than what the $325,000 in January this year, up 8% from market is paying,” he says. the same time last year, according to the He’s found government rental Real Estate Insitute of New Zealand. In statistics aren’t often accurate and a Otago, the number of days to sell improved number of key rental suburbs don’t seem by four days from January 2016. to be included. Overall, he says the market is much WHERE TO BUY more buoyant in property sales and rents. Dunedin doesn’t have any clearly defined residential investment areas says Stringer. LOCAL DEALS Every area has its pros and cons, for Dunedin-based property investor Kathryn example South Dunedin provides an Seque won the New Zealand Property affordable entry into the market, but isn’t Investor Federation’s Landlord of the Year such a desirable place to live, says Stringer. award in 2016. She and her father restore Dunedin’s highest capital gains old houses into more appealing, warmer continue to be strongest in the student and drier homes for tenants. enclave of North Dunedin (4.4%) and She manages her father’s large portfolio Roslyn for apartments and flats (4.1%). of 45 student flats and owns four houses Glenleith has the highest gross yield for that she rents to young families. housing at 8.4% with Dunedin central Recently she bought a run-down topping gross yield for apartments and house for $150,000 in Cranley flats at 7.5%, according to the Westpac Street, with an unusable kitchen, and Property Investor Report 2016. mould-covered bathroom with no 52 NZ PROPERTY INVESTOR // MARCH 2017 WWW.PROPERTYINVESTOR.CO.NZ // NZ PROPERTY INVESTOR 53 19 Cranley Street BEFORE What you need to 19 Cranley Street AFTER know » The median house price is $325,000 » Yields range from around 4.1% to 7.5% » Dunedin’s growth rate is 1.3% a year per capita and growing » 84% of Dunedin residents rate their quality of life as good » The city’s population is 126,000 during term time when one fifth of the population is students » Enterprise Dunedin aims to make the city a digital hub » The University of Otago is the city’s largest employer floor coverings. She spent $30,000 on IF YOU DON’T HAVE She’s had a pretty good run with the renovating the place over six months which student tenants and she works hard to involved getting everything replaced, ANYTHING RENTED BY establish a good relationship with them ripping out old scrim and fully insulating MID-NOVEMBER THEN from the outset. it. The house is now valued at between YOU’RE STUFFED “I have about two disputes a year, and I in population and labour utilisation, as $285,000 and $300,000. can generally predict which flat is going to well as productivity improvements across Another local investor, Mike Harbott, – KATHRYN SEQUE be a problem. This year it is a flat of boys the city’s economy owns seven large student flats in North and I’ve been to see them five times in The strategy aims to create 10,000 jobs Dunedin. houses still exist – landlords are wising up three weeks for not paying rent, partying over ten years and an average of $10,000 He bought his eight-bedroom house to the change in demand. and flat disputes,” she says. extra income for each person. on Duke Street for $230,000, invested Every year, Seque pulls down at least “As long as we grow availability of jobs, $150,000 in to renovations and it is now one old ‘dunger’ and replaces it with a fully WEATHER WARNING people will want to live here, and we are currently valued at $650,000. Rents are insulated, double-glazed flat, usually let to One risk to be aware of is Dunedin’s STUDENTS ARE already seeing this with people shifting $120 a room per week, and he gets a yield international students. propensity for floods, particularly low-lying MUCH MORE from Auckland,” he says. of 8%. Their rents range from $115 per week for South Dunedin which used to be a marshland. There is a building boom in the The yields on his other properties vary a room in older flats to up to $180 p/w for On February 13 this year, a short but DISCERNING construction sector and tradies are in hot and the further the properties are away fully-furnished, brand new houses. intense burst of rain and hail caused ABOUT THE demand, he says. from campus the lower the yield, he says. “Often you might find five students flooding in parts of the city and the Dunedin In 2016, the council processed 2717 who will live in a three-bedroom flat to City Council responded to 14 houses. QUALITY OF THEIR building consents – the highest number in THE LIFEBLOOD bring the rent down, and a lot of rents are “In some houses in South Dunedin, RENTAL THAN IN the past six years. OF DUNEDIN subsidised by parents,” she says. you can feel like you are in a wave, the THE PAST. Building applications include some The students who attend the Unviersity At the end of semester one, there is foundations are so out of whack,” says Seque. high profile developments such as the of Otago are still very much the life of the the first rush of students looking for flats. Seque cautions investors to look before University of Otago Dental School city, acccounting for just over 20% of the Often houses can be rented six months in they buy, and make sure they know how redevelopment, restoration work on population at the 2006 Census. advance of students’ return to university. to deal with flooding – employing a local growth that puts pressure on the lifestyle the risk of losing business and people to the Dunedin Courthouse and Otago Elmer thinks the students occupy about There is another rush for properties property manager is a good idea, she says. enjoyed by Dunedin’s residents. other cities. It is focused on developing the Polytechnic student accomodation. half of the rental stock in Dunedin. between May and July, she says. “We top a number of quality of life skills, incomes and job opportunities for When it comes to the housing market, The perception of Dunedin as the place “If you don’t have anything rented by WHERE TO FROM HERE? measures and people here are very its residents, according to its Economic Stringer thinks there will be continued where students (affectionately known as mid-November then you’re stuffed,” she says. Enterprise Dunedin director John Christie conscious about all this,” he says. “You Development Strategy 2013-2023. pressure for the next six to seven months, a ‘scarfies’) live in damp, dark and squalid Advertising for students has become says the city experienced a decline over know, you wouldn’t want to go from a Overall, Dunedin’s economic slow-down during the election and then a flats is changing though. more competitive. “All we used to do was the last decade with the closures of seven minute commute to a 10 minute performance has improved over the past 10 return in confidence. Seque says many students want and can advertise on the Otago University website, significant companies, but Dunedin is commute,” he jokes. years, but is not improving at a fast enough Harbott believes there is scope for afford better quality houses, particularly but now you’ve got to use social media and if a resilient community. Enterprise Dunedin, which is the rate to better the national average in the Dunedin to continue to grow for another visiting students from Europe and Asia. you don’t start advertising by June, you will “Things are good for us now,” he says. economic development arm of the Dunedin foreseeable future, says the strategy. 12 months, given properties have an entry While she says the old, cold and damp have missed a lot of the market,” she says.