In March 2015, the St James Apartments developers proudly announced more than 170 apartments in Auckland’s had been presold. Actually, the site has a lot of heritage.
It is located on the corner of Wellesley & Kitchener Streets, Auckland Central. Auckland city is now home to many apartment buildings but there are only a handful of these beautiful old Heritage buildings of which St James is one. Many apartment investors were looking forward to its completion.
Now more than a year and a half later, the developers make another announcement. Unfortunately, banks appetite for apartments have decreased and the developers have been forced to come up with more funds themselves. This has resulted in developers asking the initial buyers to increase their deposit by 10%.
On a $750,000 apartment, this means the buyer has to come up with another $75,000 on short notice (about 10 working days).
Thankfully, buyers who have paid deposits have the option of a full refund, plus interest, if they decide not to continue the investment.
If significant investors do pull out, it will result in the St James development project being delayed until new buyers are found. This could mean further bad news for the original investors and yet reminds us the inherent uncertainty and risks of buying apartment projects off the plans.
No wonder, many seasoned investors and first home buyers prefer houses over apartments.