HOW LUXURY MANSIONS FIND A BUYER
Only a handful of properties will sell for more than $20m. Mikaela Wilkes explores how those sales come about.
Real estate tycoon Graham Wall says his multi-million dollar family business is 80 per cent good luck, and 20 per cent excellent good luck.
He holds the record for the most expensive property ever sold in New Zealand, a sevenbedroom clifftop mansion that fronts Paritai Drive in Auckland went for $38.5 million in 2013 to China-born businessman Deyi Shi, the chairman of Oravida Group. The property was developed by former Hanover Finance director Mark Hotchin.
Wall reckons he ‘‘could sell that house for $55 million this afternoon’’, but that’s not how the luxury real estate industry works in this country. ‘‘Only a handful of houses will ever sell for above $20m in New Zealand.’’
A New York-esque ‘‘super penthouse’’ is the crown jewel of Auckland’s latest luxury development, the Pacifica, hit the market for $40m last year and received rare government approval to sell to foreign buyers.
If it sells at that price, it will eclipse Wall’s record. Although he’s ‘‘certain no Kiwi will pay that much for an apartment’’.
Very wealthy Kiwis pretty much all want the same house, Wall believes: something modern and low maintenance, five or more bedrooms, a garden, tennis court, and a view, in Remuera or Herne Bay.
‘‘In a funny way, big old properties like Grant Dalton’s former place [in Auckland’s Remuera] are becoming less popular,’’ said Ollie Wall, Graham Wall’s’s son, who is also in the family business alongside brother Andrew.
Older wealthy buyers want new houses because they don’t fancy the upkeep. Younger buyers don’t want old houses because they prefer modernism. That is why grand old dame villas can languish on the market for months, or years.
On TV, in shows like the United States’ Selling Sunset, buying and selling agents help secure the deal.
It’s not quite like that in New Zealand.
Here, it goes a little like this: ‘‘A guy called yesterday afternoon and said he would like to sell a $25m place, not far from Peter Burling and Lorde’s houses in Ponsonby.
‘‘I can think of eight people who would be keen to do that before the end of this week, maybe not, but probably.’’ And we’ll most likely never see or hear of the transaction.
Who are the buyers?
More than half of the Walls’ clients are based in Auckland, and the vast majority are Kiwis. Overseas buyers generally cannot purchase residential property in New Zealand due to the Overseas Investment Act.
‘‘We’ve seen two things happen since Covid-19,’’ said Ollie Wall.
Cashed-up Kiwis are coming home in droves: ‘‘Often, someone who has lived in London for 10 years, with young kids, who earned a lot of money in the corporate world, has visited for Christmas and gone what the f... are we still doing in London? Look at this place, it’s paradise.
‘‘Auckland has grown up. It’s not the city people left when they were desperate to get out into the world a decade earlier.’’
Secondly, Kiwis have started placing more importance on a family lifestyle.
That resulted in a lot of upgrading. For most of us, that was a fresh coat of paint, or splurging on a builder for some minor renovations, or maybe a spa pool. For the wealthy few, that meant trading up from an $8m home to a $10m home, Graham Wall said.
‘‘We find sales either happen on day two or three, or six months down the line. A lot of these people aren’t in a huge rush.’’
Unlike most of us, they don’t need to settle fast, so they can find their next property. They have the luxury of time, as well as money.
What’s happened with prices?
The average house price increased nationwide by 24.3 per cent to a new record high of $826,300 in March. According to the Real Estate Institute of New Zealand (REINZ), that is up from $665,000 a year ago. The average mansion price didn’t move quite that much.
‘‘At our end of the market, we don’t see the ups and downs as much,’’ said Graham Wall.
‘‘We notice more action rather than massive jumps in price. A $20m villa two years ago is now $25m, but that’s not a large increase as a percentage.’’
What was an $8m home two years ago would probably now sell for $12m.
‘‘We have definitely noticed
‘‘We had phenomenal luck from day one. The first things we did were big.’’ Graham Wall
an increase in the number of properties being sold in this upper end of the market, which is a combined result of increasing house prices and a growing demand for high-end property in New Zealand,’’ said Wendy Alexander, acting REINZ chief executive.
For the five years ending in March, 96 properties sold for $8m or more, compared to 26 properties in the five years ending March 2016.
‘‘The luxury real estate market is a niche sector of the industry that a limited number of agents work in, as it tends to require a specific network and rather different approach than the ‘everyday’ New Zealand home,’’ said Alexander.
‘‘Understandably, there is also a limited number of purchasers looking for property in this price bracket, which can sometimes result in longer marketing plans and an extended number of days to sell.’’
There are, essentially, a finite number of mansions in New Zealand. The land is expensive, as us less-fortunate are all too aware. Construction is more expensive still.
For a rich-lister to build the house of their dreams somewhere like Auckland, they’d have to pay for the land, and then sit on it with fingers crossed that the government doesn’t do anything to effectively stop prices rising while they build, in order to make it worthwhile.
They don’t do that very often. What happens instead is that mansions change hands when people enter different phases of life, or different tax brackets. That makes the sprawling homes of the early-2000s hot property.
How do you get into selling multi-million-dollar homes?
‘‘When I was 12, I went to the movies and in one of the shorts a guy was in Beverly Hills with a Jaguar with the hood down, and he was selling mansions to the rich and famous. And he didn’t have a tie on. My dad was a dentist who put his tie on every day. I thought, I like the look of that other guy’s life,’’ said Graham Wall.
He got his start as an ad man in 1999, hired to head up a campaign for a new retirement village in Remuera. He convinced them to ditch the standard $100K brick-and-tile units for $400K-$500K luxury apartments. ‘‘Now there are loads of nice retirement villages, but that was the first.’’
All those apartments were snapped up – inadvertently bringing to the market several homes in New Zealand’s mostexpensive suburb.
If you’re going to jump into the deep end of a new career, he supposed it may as well be in the private infinity pool.
Graham Wall enlisted a mate to sell them, then got his own real estate licence.
‘‘There is a temptation for real estate agents to say a house is worth more than what they know they can sell it for, to land the job. A lot of people work on that basis,’’ he said.
‘‘We did the opposite,’’ he said, and only promised what the homes were actually worth.
‘‘We had phenomenal luck from day one. The first things we did were big. We sold Sir Colin Giltrap’s [the biggest car distributor in New Zealand] house.’’
The Sultan of Brunei owned 12 properties in Herne Bay, collectively worth $35m in 2005, that he was willing to sell if Graham Wall took no commission. The buyers paid a small fee instead, to get access to them.
‘‘It put a stake in the ground as to the value in Herne Bay,’’ added Andrew Wall.