Esplanade block real estate valuations fall

Rating values of properties in the block by St Clair Beach have taken a tumble. PHOTO: GERARD O...
Rating values of properties in the block by St Clair Beach have taken a tumble. PHOTO: GERARD O’BRIEN
Some of Dunedin's premium real estate has taken a big hit after the latest round of property valuations.

Most buildings in the block fronting the Esplanade at St Clair have been affected, wiping hundreds of thousands of dollars off rating valuations.

The new values have been described as ``way off the mark'' by one property owner, and dismissed by others.

Another, who owns a home on the block, had his valuation cut by close to $200,000, which he said he could not understand.

The man, who asked not to be named, said the drop would affect any borrowing he wanted to make on the property.

The Dunedin City Council last week released valuations from which it will set rates on properties across the city from the middle of next year.

Quotable Value was contracted to do the work, which resulted in an overall 12.6% increase in capital value, and a 19.5% rise in land value for residential properties in the past three years.

The commercial property market overall showed moderate growth in a 7.6% increase.

The valuations took into account data from sales in an area, some external inspections and building consent data.

A property owner at St Clair alerted the Otago Daily Times to the issue there.

The value of ``improvements'' on his property - which refers to the value of the building on it - had dropped from $40,000 to just $5000.

Asked about the issue, Quotable Value's Tim Gibson said the house in an area zoned to allow business, retail and apartments, had ``limited added value on a high value site''.

A similar issue occurred in North Dunedin where ``good money'' was paid for a property and the house on it was demolished.

``Essentially, we have the same issue here where it hasn't been developed, but potentially it could.''

Mr Gibson said property owners and occupiers were entitled to object to the revised valuations in writing by December 16.

In the wider block there had been few sales, and value was decided more on an income approach, he said.

Valuers looked at the rental level, and the yield an investor could anticipate.

Questionnaires were sent to owners earlier in the year requesting rental information, and that was used to analyse rental level movements.

``Essentially, when you buy a commercial property it's an investment portfolio, so that's a driver of the value.

``There's always wee pockets that do something different to the norm, and that's what's happened here.''

Bedford St property owner Allan Cubitt said the valuation of his property, which had dropped by more than $100,000, was ``not in touch with reality''.

He had recently bought a house in the area, and his daughter was seeking to buy.

``It's way off the mark. They're in dreamland as far as I'm concerned.''

Mr Cubitt said he would discuss the issue with his own valuer, who was ``very surprised'' by the QV valuation, and would consider appealing the valuation.

Murray Macarthy, a major property owner on the block, said the valuation meant ``cheaper rates, I suppose''.

His properties, which include the Majestic Mansions apartment block and a next-door cafe and bar, were ``pretty unique''.

He agreed the valuation was taken into account when properties were sold, but said there was building going on in the block, and no shortage of people ringing him wanting to buy.

He said the three-yearly valuation was just ``a blip''.

Real Estate Institute of New Zealand regional spokeswoman Liz Nidd said there had been ``some really big sales'' in the area in the past, but to her knowledge there had not been a lot of sales recently on which valuers could base a judgement.

``It probably just means, like the rest of the market, there's very little available.

``I wouldn't take too much from that, quite honestly.''

Mr Gibson said 757 objections were received after the 2013 valuation.

Of those, 120 did not change.

Those that did were as a result of new work such as new kitchens or bathrooms that QV was unaware of at revaluation time.

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