- A buyer familiar with Dunedin’s university life purchased two student blocks on Castle Street for $1.9m.
- The properties, known as the Fridge and Fridgette, offer an 8.4% return on rents for 14 bedrooms.
- Agent Matt Morton noted the area’s reputation has improved, with attentive property managers and university conduct codes in place.
A buyer well acquainted with the vagaries of Dunedin university life has picked up two student blocks located on the city’s notorious party street for just under $2 million.
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Agent Matt Morton, director of Matt Morton Real Estate, said the buyer owned other student accommodation in the area and thought the Castle Street units would be a good addition to his portfolio.
The neighbouring properties are known to Dunedin’s student population as the Fridge and the Fridgette – not for the stockpiling of cold beers but because they used to be freezing to live in.
Morton said the $1.9m sale price was lower than the $2.35m the vendor had initially hoped to get and that the size of the offering had put off some buyers.
Smaller four or five-bedroom properties tended to be popular with investors, but the 8.4% return on rents for the 14 bedrooms in the Fridge and Fridgette was a good one, he said.
The band Six60 pose on a couch outside their former student flat at 660 Castle Street. Photo / Supplied
Accommodation on Castle Street is popular with Otago University’s second year students, who view flat-shares – and parties – in the area as a rite of passage.
Famous former residents of the street include Kiwi rock stars Six60, who took their name from the house they used to live in.
And while some investors were wary of taking on properties in the area, Morton said the street had calmed down since the couch-burning days of old.
“You find that Castle Street tends to attract a certain kind of investor, who are comfortable with the fact they’re going to have more parties in there and there’s a bit more to deal with, and also you do need the right property managers.”
Most of the flats in the street were managed by specialty property managers who knew how to deal with students, and who often helped the students transition to adulthood.
“Having a good property manager in place that knows how to manage those properties and work with those tenants is really key to making them successful and not having big headaches.”
The property managers would often have a sit-down with the students at the start of the tenancy so they understood everything from how the washing machine worked to their responsibilities around the fixing of any damage.
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Castle Street probably had the “most attentive” property managers, Morton said, but it was not the war zone people thought, especially as Otago University had a Code of Conduct students had to adhere to.
“There were years in the past where it was pretty anti-social behaviour and you saw a lot of couch-burning but that’s been well stamped out by the university.”
The Sophia Charter, named after Sophia Crestani who died at an overcrowded student party in a nearby street in 2019, had also led to lessons being learned and students being educated about responsible host behaviour, Morton said.
“The varsity is really, really good at trying to prevent these things and help the students to prevent them.”
The Fridge and Fridgette used to be neighbouring male and female flats, hence the names, but Morton said they were both mixed, adding that property managers sometimes preferred female tenants because they tended to keep the flats a bit nicer than the boys.
Cool but not cold: Inside the well-heated student accommodation in the Fridge. Photo / Supplied
They were still no-frills flats but the students tended to respect the properties.
The vendor had owned the Fridges for 12 years but had, on hitting retirement age, decided to exit the market.
Morton said the North Dunedin student accommodation precinct was an interesting “petri dish” for investor behaviour because there were hardly any owner-occupiers in there, and investors were heading back to the market.
The third quarter of last year saw a spike in sales which Morton put down to the Government bringing the bright-line test back from 10 years to two years.
“I was a little bit surprised how many of them were waiting for that rule change. I’m anticipating we’re going to have the same sort of reaction in April once the interest deductibility is fully restored as well.”
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