DUNEDIN STUDENT & RESIDENTIAL INVESTMENT UPDATE Q2 2018 As new government initiatives continue to economic and investment confidence in Price Range of Sold Properties hassle investors, the Dunedin investment Dunedin. market has continued to move forward, From speculation to fact, sales volumes unabated by recent announcements extending Highest have increased since 2017, and yields have 1.05m the Bright-line test to five years (paying $1,050,000 tightened in all three areas we monitor tax on capital gains) and the more recent below, evidencing investors’ confidence in announcement to ring-fencing losses around 950k this market. Studio rooms were a particularly property portfolios. While both negatively strong property type to purchase, which impact investors, the strong entry point factors 850k generally delivers a healthier cash return, and favouring Dunedin above other centres, and is in favour with more buyers than previously the apparent increase in demand from tenants 750k experienced. is currently opposing these forces for many investors. Dunedin is still very much on the map for 650k investors with the low entry point and Property Managers are reporting significant relatively high returns when compared 550k early applications for student flats for 2019 Upper Quartile to other centres. The wider residential $507,000 and rental prices appear to be increasing with home ownership market is currently very 450k demand, more so than in recent years. The buoyant, out pacing all the main centres for Median University has suggested more students are $386,750 current year on year growth. This unpinning enrolling and announcements like the new 350k confidence is setting up Dunedin for a very Lower Quartile $1.4 billion hospital build are underpinning $312,500 strong year ahead. 250k Student Market Summary of Sold Properties - First Quarter 2018 150k TOTAL SALES NUMBER OF MEDIAN YIELD MEDIAN YIELD Lowest $72,000 VALUE SALES (last 3 months) (last 12 months) 50k Campus $7.7m 16 6.6% 7.0% Inner City $11.9m 27 6.4% 7.3% Q1 2018 - 54 joint tenancy sales (excludes studio rooms) across all monitored areas. North East Valley $2.8m 11 6.8% 7.4% Each quartile range represents one quarter of the total 54 sales. * Studio room properties have been separated so as not to Studio Rooms* $9.2m 11 mis-apportion the price and yield data, as they contain additional landlord outgoings and are not comparable to joint tenancies. Source: Core Logic, REINZ, Colliers International Dunedin 01 Dunedin Student & Residential Investment Report Q2 2018 2017 SOLD INVESTMENT PROPERTY DATA 1 JANUARY TO 31 DECEMBER 2017 North includes North East Valley and Woodhaugh (refer map) 1-bed 2-bed 3-bed 4-bed 5-bed 6-bed 7+ beds Multi Studios Number Sold 5 6 6 13 7 4 2 2 4 Median Yield 5.6% 6.6% 6.8% 7.3% 7.4% 7.8% 10.6% 9.1% 8.9% Median Price $305,000 $220,000 $251,000 $255,000 $314,000 $424,000 $472,000 $234,000 $480,000 Median Price (per bed) - $110,000 $84,000 $64,000 $63,000 $71,000 $56,000 n/a $120,000 Median Rent (per room) $330 $135 $110 $98 $108 $110 $105 n/a $206 Campus includes Campus North, South & Fringe and North Dunedin (refer map) 1-bed 2-bed 3-bed 4-bed 5-bed 6-bed 7+ beds Multi Studios Number Sold 1 0 0 10 16 11 0 2 9 Median Yield n/a n/a n/a 6.8% 6.9% 7.3% n/a 7.1% 8.8% Median Price $160,000 n/a n/a $385,000 $486,000 $520,000 n/a $800,000 $965,000 Median Price (per bed) $160,000 n/a n/a $96,000 $97,000 $87,000 n/a n/a $145,000 Median Rent (per room) n/a n/a n/a $128 $130 $128 n/a n/a $190 City includes City 1 only (refer map) 1-bed 2-bed 3-bed 4-bed 5-bed 6-bed 7+ beds Multi Studios Number Sold 2 1 0 2 2 2 2 5 3 Median Yield n/a 6.5% n/a 6.7% 6.6% 7.4% 8.2% 7.6% 9.2% Median Price $286,000 $223,000 n/a $310,000 $610,000 $616,000 $630,000 $594,000 $770,000 Median Price (per bed) n/a $111,000 n/a $77,000 $122,000 $103,000 $79,000 n/a $76,000 Median Rent (per room) n/a n/a n/a n/a n/a n/a n/a n/a n/a Source: Core Logic, Colliers International Dunedin Notes: • Multi means multiple dwellings with two or more dwellings in one building. • Studio means a property with individual tenancies per room and the landlord provides utilities included with the rent. • City Area is only City 1 on the map. Data for City 2 & City 3 is only being collated from 2018. • Median rent per room is for sold property only, not market rents across non-sold property. 02 Dunedin Student & Residential Investment Report Q2 2018 APPRAISING INVESTMENT PROPERTY MatchMe property Many statistics are presented and rumoured around the investment market, but are generally only an average of the market, which can lead to a misunderstanding at times of what a Colliers operate a unique ‘buyer particular property could be worth. matching’ program called MatchMe, that alerts buyers by email and text Investors are often assuming an average yield across the market and then applying it to any when a matching property is for sale. type of property whether it be a small two-bedroom property or a larger 7-bedroom villa, Every buyer is asked for their or even a multiple dwelling property. Of course, many other factors come into play, such as specific investment criteria which whether the rental return is at correct market levels, the state and condition of the property, the in turn allows us to match qualified age, the specific location and what opportunities there may to be to make improvements in the buyers directly to your property. We rent or property or both. It is not an exact science and does require a good degree of market reach more buyers across New Zealand and internationally to knowledge and understanding current buyer behaviour and sentiment to correctly appraise an get you the best price in the market. investment property. Investors however can find a starting point themselves with returns or bedroom prices, FOR EXAMPLE: depending on which is more appropriate to the property. The tables on Page 2 provide a complete set of data for investment properties sold and settled in 2017 in the three main 6 investment areas Colliers monitor, which correlate to the map below (note City in the tables beds relates only to City 1 in the map). Campus North location When receiving a formal appraisal from a licensed agent, you can expect several minimum points that by law we must deliver. We must provide an appraised range for your property Add-Value type and that range must correlate to comparable sales, of which we must deliver a minimum of three with specific market knowledge and evidence. These comparable properties also must $600,000 budget be explained as to why they are comparable, not just listed for reference. If no comparable properties exist, then we must explain in writing why not and how we came to the appraised matching buyers range. The Real Estate Authority is firm on this, as you are expected to be delivered good 91 factual information, not simply a speculative price to win your business. For a more thorough appraisal of your property, please contact Colliers International so that 4 beds we can apply the latest statistics, market knowledge and buyer behaviour to your particular property. North East Valley location KEY P e DUNEDIN - NORTHERN SUBURBS S n North e t lw la y n Gladstone Rd n d Campus Crown St S S City t t Renovate Warehouse type Suburbs WOODHAUGH NORTH EAST VALLEY Mechanic St G t Blacks Rd l a B S d u s c gh Frame St t c u o le Malvern St n $350,000 PINE HILL RD e Chambers St R D d R budget H Glendining Ave T Ramsay St R O BALMACEW N EN ROAD OPOHO RD matching DUKE ST Signal Hill Rd buyers 37 CAMPUS FRINGE D Howe St R IV ER S R O CASTLE ST A D CAMPUS NORTH DUNEDIN - HILL SUBURBS Leith St Nth 2 T Q A U IE E Queen St R E DUNDAS ST I NS R D beds O R A IV D E GEORGE ST GREAT KING ST E T A G CUMBERLAND ST City 1 H PITT ST UNIVERSITY IG H OF OTAGO CLYDE ST FORTH ST location Harbour Terrace D OA R Y Heriot Row LE AL ALBANY ST AI V KOR KAI NSB Stadium RAVE OURNE Buy & Hold FREDERICK ST ROA Hyde St ANZAC AVE D LONDON ST type CITY 1 GEORGE ST STUART ST Grange St Leith St CAMPUS SOUTH Cargill St ST ANDREWCUMBERLAND ST ST T YORK PL E E R T $400,000 S S N R budget RA U TT B RAY S ST SMITH ST A M O H T THE OCTAGON T E E R matching CITY 2 T S T T buyers A Y R F 73 WAREHOUSE PRECINCT AWTHORNE AVENUE H T EE TR H S CUMBERLAND ST IG T H E E R T T E S Test us on how many buyers M E AIL R D ER T R S S O T R F D E S E E we have for your property.