Iwi flipped Wellington’s Dixon Street flats for just over $3 million, less than three weeks after buying the block from Kāinga Ora for almost a third of the price.
Good on the iwi – they made $2 million. Bad on Kainga Ora for being stupid.
Both sale prices were significantly below the property’s market value of $4m and the RV of $18.9m.
So they sold other for one quarter of the market value. Why?
He told OneRoof that when Kāinga Ora first offered the Dixon Street Flats to iwi under the Right of First Refusal (RFR) process in their Treaty settlement, Taranaki Whānui Limited had initially offered to pay a lot less.
“The opening offers they made on the property were low. We negotiated with them to bring the price up. While the $1.04m price we settled on was nearly $3m lower than the market valuation we had obtained, there was no guarantee we would get a higher price if we put the property on the open market, given its challenges and the scale of investment needed.”
Of course there is no guarantee. But you don’t need to be Einstein to work out that if the market value is $4 million, there would be no shortage of companies willing to pay much more than $1 million for it.
A right of first refusal is not a commitment to sell at any price regardless.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders
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