2019 Annual Honours — Sales

Frankton Ramada (Ramada Hotel Queenstown)

133 units sold

Project value: approximately NZ$56,000,000

Auckland Ramada Victoria (Auckland Ramada Victoria Hotel)

119 units sold

Project value: approximately NZ$75,000,000

Auckland Ramada Manukau (Auckland Ramada Manukau Pacific Centre)

142 units sold

Project value: approximately NZ$62,000,000

{ad}

Nearly 400 units sold in 2019, with a sales rate of 98%

Safari Group: a winning development model

One New Zealand property company successfully delivered three projects in 2019, achieving an outstanding annual result of nearly 400 units sold and a sell-through rate of 98%.

That company is Safari Group, which has successfully aligned its market and products. What is the secret to its success behind these figures?

A pioneer of New Zealand's hotel development model: Safari Group's journey of more than a decade in hotels. Established in 1996, Safari Group (NZ) Limited focuses on property development and construction across a broad range of commercial, industrial and residential projects.

Over more than twenty years, its developments have spread across New Zealand's major commercial and tourism centres. Its extensive experience and capable professional team ensure the reliability and high standard of workmanship of Safari Group apartments, meeting customers' needs.

Safari Group has successfully developed more than twenty projects, including Ramada Hotel Queenstown, Ramada Manukau Pacific Centre Auckland, Ramada Victoria Auckland, Wyndham Garden Queenstown, Ramada Albany Auckland, Ramada Remarkables Queenstown and Ramada Federal Street.

Partnering with international brands and focusing on the hotel product model. Safari Group founder Robert Neil chose hotel development investment more than a decade ago.

He has consistently subdivided hotel rooms into individual unit titles for sale, partnering first with Quest, the largest apartment hotel brand in the Australian and New Zealand market, and then with major international hotel management company Wyndham Hotel Group.

To safeguard overall operations and owners' returns, Safari Group chooses only long-term operating arrangements that benefit owners, leasing hotel properties as a whole and protecting returns for more than a thousand investors who have purchased hotel room titles.

Projects coming to market in 2020:

• Ramada Hotel and Suites Newmarket (new Ramada apartments in Newmarket, Auckland)

• LQ Hotel Kawarau River Queenstown (new apartments in Queenstown's riverside centre)

• Ramada Hotel and Suites Wellington (new Ramada apartments in central Wellington)

• Tryp Remarkables Park Queenstown (new five-star TRYP apartments in Queenstown)

• LQ Hotel Central Park Greenlane (new apartments in Auckland's Central Park, with presales expected to begin in mid-2020)

Flagship project: TRYP Hotel, Remarkables Park, Queenstown

• 64 residential units

• 147 serviced apartments

• Project value: approximately US$120,000,000

• Expected construction start: late 2020

Product advantages and investment returns

Queenstown's hotel investment boom continues. Overseas investors see New Zealand as a clean, environmentally conscious and safe investment destination with a highly transparent market.

The Government offers investors a range of significant monetary and tax incentives. With no stamp duty or land tax, transaction costs are more favourable than for investment in Australia.

Auckland and Queenstown are the preferred locations for overseas hotel investors. Tourism is Queenstown's largest economic driver. Statistics show that Queenstown Airport brings approximately 2,200,000 visitors annually.

Over the past five years, hotel investment in Queenstown has grown by an average of 16% annually, while its average house prices have remained among the country's highest.

Occupancy rates are stable, and market demand remains strong.

Backed by a global hotel brand and available to overseas buyers

The TRYP Hotel at Remarkables Park, Queenstown, is franchised and managed by Wyndham Group's TRYP brand. It offers two distinct apartment types: investment serviced apartments and residential apartments.

TRYP Hotel is the property's long-term tenant, operating and managing it to five-star hotel standards so owners can take a completely hands-off approach.

The project has 64 residential units and 147 serviced apartments. Buyers can manage their units themselves, have them managed as investment properties or rent them out for competitive rental returns.

Commercial lease term

The project's commercial lease totals 30 years, structured as 15 + 5 + 5 + 5 years. Rental income has relatively stable protection regardless of the hotel's operating performance.

Investment returns

Depending on the unit type, annual rental income is 6.74%–6.94% of the room's total price, paid directly into the investor's bank account each month.

For example, a buyer purchasing a studio for NZ$319,000 receives annual income of NZ$19,000, with annual property management fees and council rates estimated at NZ$1086 + NZ$1900 = NZ$2,986, giving annual net rental income of NZ$19,000 – (NZ$1086 + NZ$1900) = NZ$16,014. Owners can also stay free for 10 days each year.

Rent reviews and increases

From the fourth year after signing the lease, rent increases by 2% annually. A market rent review is also conducted every five years.

If demand for hotel rooms is strong, rent may rise further.

Key investment information

• No restrictions on overseas buyers

• Commercial lease: 30 years, structured as 15 + 5 + 5 + 5 years

• A franchise operator with international business experience

• A guaranteed gross return of up to 6.11%, paid directly into your bank account monthly

• Annual rent increases of 2% from the fourth year

• Owners receive 10 days of free use each year

• A commercial guarantee of rental payments

• Prices from NZ$319,000

Purchase process:

1. Buying any property in New Zealand requires a local bank account, an IRD number and a lawyer to review the relevant contracts. You must come to New Zealand in person to open a local bank account. An IRD number can be arranged through a lawyer or by applying yourself in writing.

2. Once you have chosen your unit and signed the contract, it will specify a 10-working-day investigation period

(due diligence) and be sent to your nominated law firm. If you are dissatisfied with anything during those 10 working days, you can cancel without legal liability, but your lawyer must notify the seller's lawyer in writing. The seller will charge nothing, although your lawyer may charge for reviewing the contract. If you are satisfied with all terms, on working day 10 you must pay a deposit of 10% of the apartment price for local New Zealand residents, or 20% for overseas buyers, into your law firm's trust account. The funds are then transferred to the seller group's trust account to earn interest.

(All funds must be transferred from the buyer's own account to their appointed law firm. New Zealand does not permit buyers to transfer funds or cash directly to sellers.)

3. After paying the deposit, wait for construction to be completed, and the seller's lawyer will notify you before the apartment is finished.

4. When you receive the seller's lawyer's notice confirming settlement, prepare to pay the balance. If you can obtain a loan, contact your lending manager or bank; otherwise, ensure you have sufficient funds. If you fail to settle on time for personal reasons, the seller will not refund the deposit, so sign the contract carefully.

5. After paying the deposit, wait for construction to be completed. The seller's lawyer will notify you before the apartment is finished. (All funds must be transferred from the buyer's own account to their appointed law firm.)

For borrowing in New Zealand, consult an appropriately qualified local bank or lending manager. Below are some frequently asked questions from clients.

Q: Can I borrow to buy an investment property?

A: Yes, up to 70%, depending on your income.

Q: I do not have New Zealand residency and am on a visitor visa. Can I get a loan?

A: Yes, provided you are eligible to buy a property.

Q: I do not yet have New Zealand residency and hold a two-year work visa. Can I get a loan, and how much can I borrow?

A: If you can buy a property, you can get a loan: 80% for an owner-occupied home and 70% for an investment property.

Q: I do not yet have New Zealand residency and hold a student visa. Can I get a loan?

A: Student visa holders cannot get a loan.