When Christchurch developer Property Ventures established the first of its network of very modern LivingSpace residential complexes, it chose a heritage buildings to put it in.
The company, owned by the high-profile Dave Henderson, believed a residential use would be ideal for the heritage-listed 1919 Wellington Woollen Mills building it had bought in Lichfield Street in central Christchurch.
It also saw a residential complex as key to attracting businesses to the precinct of bars, restaurants and shops it was creating next door in the Sol Square/His Lordships Lane precinct, which is now up an running.
As the company's marketing material described it, LivingSpace residents were "a captive audience with disposable income".
So the LivingSpace brand was born, and was then extended to a 1950s commercial building in Castle Street in Dunedin, and another in Tay Street, Invercargill.
They have been named, north to south, as The Mill, The Castle, and The Tower.
Mainly young professionals and international students rent LivingSpace apartments – which are fitted with double beds, internet access, Sky TV, and kitchenettes – and have access to its brightly coloured communal kitchens, lounges, laundries, outdoor courtyards, business suite and games and movie rooms.
But property developers need cash to continue their work.
So Property Ventures is selling off pieces of the properties – a total of 234 studio apartments in the three cities.
In the case of the Christchurch property, the company will keep the larger (two and three bedroom) apartments.
Henderson says the sales will fund new LivingSpace complexes in Queenstown, Auckland and Wellington, and the expansion of the company's new Hotel So chain.
"We are just going to unlock their equity," he says of the studio apartment sales.
"We never built these to sell them, which should be a great comfort to investors."
Buyers will be entering into an unusual arrangement.
For a price of between about $120,000 and $150,000, they will be purchasing a studio apartment on an individual title.
But instead of simply renting it out or moving in themselves, they will be getting a title carrying a commercial lease to LivingSpace, which is owned by Property Ventures and runs the three complexes.
Owners can then buy and sell their property as they chose.
Marketing agent for the sale, Pete Whalan of Bayleys, describes the investment as entry level.
"Where can you get a commercial 15-year-lease for this sort of price?" he says.
Property Ventures' marketing director Luke Richardson says a net return on capital of 6 per cent is guaranteed for 15 years, with any income fluctuations from the property affecting the LivingSpace business rather than the investor. The company will carry the risk if the property is vacant, but will also reap the benefits if market rents rise.
But the apartments are for investors only – owner/occupiers need not apply.
The arrangement is most similar to those in hotels, where investors buy suites or managed apartments, with the hotel chain managing the complex.
"Being a capital-hungry property development company, it allows us to take our money out of here and keep the machine rolling," Richardson says.
"It enables mum and dad investors, small investors, to buy into a bit-sized investment but get the benefits of owning a large property."