Dual Key Revival

While current fiscal conditions have created significant challenges for investors and homeowners alike, there is a small silver lining for those of us in real estate sales. As many developers face increasing difficulty in moving their stock, we now have the opportunity to be more selective about the properties we recommend to our clients. This shift is also prompting wider recognition among developers of the need to enhance the quality of their offerings, which, in turn, is resulting in notable improvements in the properties being built.

Among the developments gaining traction, we’re seeing a resurgence in dual key properties—an investment product with considerable potential when executed well. These properties offer the unique advantage of generating rental income from two separate living spaces, while maintaining the cost efficiency of a single build.

It’s important to clarify that dual key properties are not simply "two homes for the price of one." While they are typically more expensive than a single equivalent property, they often present a more cost-effective option than purchasing two separate properties. For instance, we are currently marketing a dual key home in Rolleston for just over $1 million. This property includes two distinct homes—one with three bedrooms, the other with two—each featuring its own one-car garage. To purchase similar homes individually would cost around $580,000 for the two-bedroom unit and $700,000 for the three-bedroom unit, making the dual key home almost 20% less expensive than buying both homes separately, yet yielding the same rental income.

The cost efficiency of dual key properties lies in the fact that only one property needs to be consented and built, which reduces overall costs. This principle applies across the board, resulting in stronger rental yields. For example, we are currently recommending properties in Petone with yields of up to 6.62%, while the Rolleston dual key property has a forecasted yield of 5.16%. Both yields are significantly higher than the average in their respective areas, where yields typically fall below 4.20%.

For investors seeking strong cash flow performance in their portfolios, the increasing availability of dual key properties in new locations presents an exciting opportunity. These properties offer attractive yields and the potential for long-term value, making them a compelling choice in today’s market.