Developer opts for rental market instead of buyers
A Wellington developer is going against the industry tide and renting out a series of inner-city townhouses rather than selling them.
Stratum Management has built 20 three-bedroom townhouses at a site simply known as 26 Wright St in the suburb of Mt Cook.
Stratum bought the site, which used to be a television production village for Panavision, in 2006 but held off building until 14 months ago when market conditions had improved.
Development manager Robert Clemens said Stratum had chosen to keep ownership of the townhouses because the location was "a great long-term hold" and poised for capital growth.
Modern housing in the Mt Cook-Newtown area was scarce, as was land, and it would be difficult to repeat the same opportunity.
He acknowledged the double-glazed, three-storey houses were not cheap at $620 to $650 a week, but they were aimed at families and professionals, particularly medical staff at the two nearby hospitals. "Each townhouse is so close to the city. There's savings by not taking your car out of the garage and just very few of this sort of thing on the rental market."
With property values in Wellington still lurking around 2008 levels, industry sources say renting out may well make more sense for developers, who have traditionally sought capital gain.
Clemens says pre-sales have also been strong for two of its new inner-city apartment projects.
Stratum is currently completing two new apartment blocks, the 79-unit Elevate in Taranaki St and Nouvo, a 55-unit village near the Basin Reserve.
"Natural population growth has caught up with supply so the uptake is getting better and better."