But on Saturday another Malcolm was showing his faith in the neighbourhood when he paid $515,000 over reserve for a block of four flats next door to Alster House.

Yet Malcolm Craig, a Paddington resident of 15 years, reckons he got a bargain.

The winning bidder, Paddington investor Malcolm Craig, outside his new property, 4 Bates Avenue, Paddington. Photo: Brook Mitchell

“You look at what you have to pay for a little terrace here in Paddington – about $2 million – so this looks good to me,” he said.

Mr Craig lay in wait as six other bidders raised their cards after an opening bid of $2 million, an apparently reasonable offer considering the price guide for 4 Bates Avenue was $2.2 million.

I was just trying to buy the block to make life easy for my kids by leaving them four apartments.Underbidder Michael Sheika

Auctioneer Nicholas Lyell extracted more than 30 bids from the crowd before the hammer fell at $2,615,000.

The block of four flats at 4 Bates Avenue in Paddington stands on 310 square metres.Photo: 225020000086

Selling agent Peter Gillman of Shields Gillman Real Estate held a reserve of $2.1 million from the Switzerland-based owners who chose to sleep through the auction given it was held at 2am Swiss time. They woke to a nice surprise.

One of the bidders, Michael Sheika, a Paddington resident was philosophical. “I was just trying to buy the block to make life easy for my kids by leaving them four apartments,” he said. “But that guy was indestructible.”

The Darling Point-based underbidder and owner of several other property investments gave Mr Craig a run for his money. He said at the price the block sold for it would make about a 2 per cent return. He wasn’t confident of the capital return either. “The market must be plateauing out,” he said.

One of the living rooms in the Bates Avenue building in Paddington. Photo: domain.com.au

The 1920s building stands on 310 square metres in cul-de-sac that leads to Five Ways and shares a border with the Prime Minister’s former home when he was a merchant banker with Whitlam Turnbull & Co Ltd. Alster House last traded 10 years ago for $6.55 million.

Two of the four one-bedroom flats are rented at $440 a week but Mr Craig intends to do some basic improvements on the property to attract a stronger return.

http://www.domain.com.au/news/buyer-snags-bargain-block-of-flats-in-paddington-despite-selling-515000-over-reserve-20160507-goor3o/