A former Christchurch Bupa rest home that has been transformed into recently-opened student accommodation was bought at auction for $6.025 million.
The 12-year lease with a nine-year right of renewal included annual rental of $320,000 a year, making for a sharp 5.31 per cent yield on the sale.
The 7-15 Kirkwood Ave property formerly owned by Hamilton-based investors attracted 41 bids.
Marketing agent Courtney Doig, of Colliers International in Christchurch, said the property was so popular because of the significant amount of land plus the strong tenant.
The land holding of 5900 square metres is in three titles, and the building covers 2630 sqm. There was potential for redevelopment in future, she said.
Called Kirkwood Avenue Hall, the building was refurbished and opened this year to accommodate 74 full time students as a self-catered hall for first year students.
It was previously the St Nicholas aged care facility operated by Bupa NZ.
The University of Canterbury has a 12-year lease on the recently refurbished property with a further right of renewal of nine years.
Doig said the new hall had helped to address the scarcity of quality student accommodation close to the university.
The area in the heart of residential Ilam is a sought-after area by students as well as people seeking student accommodation investments.
Kirkwood Ave Hall was one of the largest conversions of such scale, Doig said.
Recent sales in the area included six ownership units at 12 Kirkwood Ave sold in 2015 for $1.4m and which were also leased by the University of Canterbury.
Other commercial properties sold at the latest Colliers auction included a building in Riccarton Rd, which fetched $3m, and a small industrial site in Waltham sold for $460,000.
Doig said more than $100m of capital “walked out of the auction room without being able to find a home”.
It demonstrated the market was alive and well for people with equity looking for high calibre well-leased properties, she said.
Another property sold at the auction was a central city complex of 16 residential units in Salisbury St built post-earthquake in 2014 and sold for $3.8 million by the estate of the late owner and comprised of two and three bedroom houses.
Salisbury St has been undergoing a transformation in recent years as more people choose to live closer to the central city.
The properties include earthquake-damaged apartment blocks that have been sold as-is-where-is over the past couple of years.
For example, two developments which changed hands in 2015 have been repaired. Refurbishments were recently completed on a 34-unit complex at 226 Salisbury St, now fully occupied.
Along the road at 136 Salisbury St, a 32-unit complex has been revamped with units now available for sale or lease.