Syndication of Queenstown’s Malaghan Alpine Lodge offers investors a bite of the apple
Media Release, 26 October 2017
A private residential syndication of a well-known Queenstown property is attracting huge interest as investors look for ways to diversify and grow their property portfolio, according to Auckland based property investment company, Erskine + Owen.
Malaghan Alpine Lodge on Queenstown Hill is almost fully subscribed, with investors staking a claim in the unique investment opportunity which is expected to yield approximately 6% – 7% before tax.
“With the shortage of accommodation in Queenstown and an estimated three million visitors each year, the purchase of Malaghan Alpine Lodge was a great opportunity for us to provide investors with a unique offering,” says Alan Henderson, Director of Erskine and Owen.
“It’s a hybrid syndicate which means that the property will continue to operate as accommodation. Syndication is a model in which investors share ownership by pooling together with other investors to access property that an individual may not be able to buy alone or may not want to. “It’s a way of gaining access to the property market, particularly higher value growth freehold property,” says Henderson.
Erskine and Owen is stamping their mark on a previously untapped property investment market. Although commercial property syndicates are offered by other companies in New Zealand, this is only the second residential offering. Earlier this year, the company fully subscribed a 31-room Hamilton based lodge in just a few weeks.
Malaghan Alpine Lodge, which was recently renovated, has significant forward bookings, and an expected 70% occupancy rate. “The combination of Queenstown’s explosive annual tourism numbers, the lodge’s prime location and spectacular views mean there’s a low vacancy risk,” says Henderson.
“That, combined with a tough property market, and investors who don’t want to put all their eggs in one basket, is contributing to the fast subscription rate,” he says.
The shortage of accommodation in New Zealand’s adventure capital has been well documented over the past few years. According to Statistics New Zealand, visitor numbers to Queenstown at the end of September 2017 increased to 3. 68 million, up nine percent on the previous year.
“A significant lack of short term and long-term accommodation, largely due to increased accessibility and infrastructure upgrades, makes the hybrid syndication a very appealing investment.”
“Buying property in New Zealand is now a lot more challenging than just a few years ago,” says Henderson. “Whilst higher prices and more restrictive lending has constrained many, most would agree that in the long term, property still delivers healthy returns.” The company plans to use the private residential syndication model as the basis for public residential syndicates in the future, which would open the door to smaller investors.
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