Chinese scoop capital hostel for $28m
A large apartment block in central Wellington housing students has been sold to Chinese company Value Partners Group for $28.3 million.
The 280-bed building at 222-232 Willis St was owned by global real estate firm Forum Partners.
The deal was negotiated by Savills’ director, Conal Newland, and Auckland managing director, Tom McAlister.
The building is leased to the Wellington Institute of Technology (Weltec) to provide student accommodation.
McAlister said the deal was further evidence of the attractiveness of student accommodation in New Zealand to overseas investors.
The 222 Willis St property was a low-maintenance investment in a stable and transparent regulatory environment, he said.
It had strategic freehold land of 2187 square metres in central Wellington as well as an excellent tenant in what is a major tertiary education provider.
The building opened in 2014 after an $18m redevelopment including a complete refurbishment and earthquake strengthening.
The building was the old McKenzie warehouse complex at one time owned by Australian company Ingenia Communities.
Each apartment was furnished and had its own bathroom and kitchen. The apartments ranged from studios to two- and fourbedroom units.
The building was within an easy walk of Weltec, Victoria University and Wellington’s CBD.
Newland said universities in New Zealand were required to provide pastoral care to students.
As a result they leased properties to offer accommodation themselves rather than contract that to third parties. This reduced the risk for property investors, with tertiary providers considered low-risk tenants.
The economics of delivering new accommodation was challenging because of a stretched construction industry and high costs. As a result student halls of residence were highly sought after by global investors.
They were tightly held by a small number of mainly institutional owners and rarely for sale, Newland said.