If you look around at the companies which are developing apartments in Auckland, or the ones who have in the past, you’ll see that most of them are private firms. This is a contrast from Australia, where there are a number of big, stock exchange-listed companies carrying out projects on a much bigger scale than anything we see here.

Apartment developers on the ASX include Devine Limited, Finbar Group, Payce, Abacus Property Group, PBD Developments, Cedar Woods, and Mirvac, who used to run some hotels here but no longer have any NZ interests. The biggest Aussie developer, though, is actually a private company called Meriton, which has “designed, developed and built more than 60,000 apartments across the east coast of Australia”.

Mirvac have completed several buildings in Melbourne’s Docklands, with more underway

The Stamford Residences on Albert St were done by Stamford Land Corporation, a big Australian company which is listed on the Singapore stock exchange. However, their focus is more on hotels – the apartments added to their existing hotel complex.

I’ve always found it strange that so few of these large-scale developers have made their way over to New Zealand. My guess is that some of them will, at some point. But then again, the lack of large scale, listed entities is also visible for traditional subdivisions here. There’s just one specialist residential developer on the NZX (CDL Investments), and of course Fletcher Building do quite a bit of development too. That compares to many more names in Australia.

An Interest.co.nz article from June also suggests that we could see more Australian developers setting up in New Zealand:

Australian apartment developers are taking an increasing interest in the Auckland market as they find it difficult to compete against huge Chinese companies on their home turf.

Bruce Whillans  of commercial real estate agency Ray White Commercial Auckland, said there was growing interest in the Auckland apartment market from Australian developers, who viewed Auckland as a more attractive development proposition than Sydney or Melbourne.

“The difference between the Australian development market and the New Zealand development market is that most of the Australian developers have serious balance sheets,” he said.

However Whillans also expected to see a pick up in development activity from Chinese investors in this country, however it may not be from the same Chinese companies that are active in the Australian market.

Incidentally, one apartment project which seems likely to launch soon (it’s apparently already being marketed overseas) appears to be a private but well-established Australian developer, so perhaps this is becoming more of a trend.

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  1. We had a quite a few infamous examples in the 1980s, most notably Chase Corp.

    More recently, does Conrad Properties count, or is it privately held? Even then, they haven’t exactly had a spotless track record.

    1. Infamous indeed – not sure if any of the 80s crowd were involved in apartments, as there simply weren’t many built at that time. However, they built vast amounts of office space, which definitely laid the seeds for an apartment renaissance in AKL and WGT in the 1990s as underused office buildings were converted.
      As for Conrad, they’re the biggest developer in Auckland at the moment, but privately held. About 3,500 apartments to their name, including the current batch.

  2. ‘it’s apparently already being marketed overseas’ If apartment developers continue to focus on selling apartments to overseas buyers, it’s just going to make it even harder for the majority of Aucklanders to accept that apartments are the answer to the housing crisis.

    1. I agree that some people will be concerned. However, I’m not sure that this concern is totally valid. For one thing, overseas investment of this nature actually increases the quantity of Auckland’s overall housing stock. Overseas buyers of new apartments may otherwise be in the market bidding up the price of existing houses, which would be bad.

      For another thing, some overseas buyers will eventually come to NZ to live here. (Some of they may even be expat New Zealanders!) Others may instead choose to rent out their apartments to Auckland residents, which, again, increases the amount of housing available here.

      Finally, “apartments are being sold to the wrong people” is certainly not a legitimate reason to prevent the construction of apartments. That would be like going back to the 1950s and 60s and arguing that we should ban new houses in South Auckland because they’re being sold to Maori moving in from rural areas.

      1. I’m with Peter on this – and New Zealanders are simply not as used to buying things off the plans, with a lead time of maybe 1.5 years or more (sunset dates often even longer). We just haven’t had as much experience with that kind of ‘product’, whether it’s intended as an investment to rent out or something to owner-occupy. I’d rather apartments get sold to foreigners than not sold at all, if it gets more housing built. The single most important thing here is that as Peter says, it increases the amount of housing available in Auckland. And those homes are likely to be occupied by people who want to live here (as per http://greaterakl.wpengine.com/2015/05/28/are-vacant-homes-adding-to-aucklands-housing-shortage).

      2. In part I agree with Brendan. The problem with selling whole complexes to investors overseas is that they are taking an investment approach, not a ‘livable’ approach. We then end up with heaps of apartments which make great investments (ie. the large Conrad blocks of tiny apartments and breezeways) but aren’t great for long term living, hence the high turn over of tenants.

        We need to build buildings with a good mix of owner occupier and tenants in my view.

        1. That’s a fair point. I do think that there’s the potential for some “market failure” in housing development if developers/buyers aren’t sufficiently attentive to public realms and streetscapes. This can happen with apartments and office blocks that just present a blank face and garage doors to the street – just as it can happen to single-house subdivisions that are full of non-connective, unwalkable street networks.

          This is an area where I can see street design rules and the Council’s Urban Design Panel playing a constructive role. However, if we’re going to take that route it should apply equally to all developments regardless of who’s buying them!

          The other issue you raise – turnover of tenants – is a bit more of a tricky one. I would argue that buyers are incentivised, at least to some degree, to avoid interior designs that result in high turnover. High turnover means paying more letting fees or missing out on rents while properties are vacant. In addition, there’s always going to be some tenants who want somewhere cheap to live for a short while, like students or people on short-term work assignments. I definitely lived in some cheap flats in my early 20s that I wouldn’t tolerate now!

        1. Yeah, that was sort of my point. Banning things because the “wrong type of people” might buy them imposes broader costs on the whole of society.

  3. Todd’s are also in the subdivision game – they took over Pegasus for quite a discount and have several other interests around the country.
    Not listed on the NZX though.

        1. Landco was definitely in trouble but Todd weren’t the white Knight Greg thought they were. When Todd are dealing with someone with their back against the wall, you know who is going to get the best deal.

  4. Is it large scale developers that Auckland needs – or just a more diverse and more imaginative residential development industry?

    Agree that discussion about the quality of the suppliers has been somewhat lacking in the Auckland conversation on housing. Seems probable that Auckland, relative to Australian cities, has a lack of industry depth and capability for doing mid/high-density residential development – and that this is part of our housing problem. Something that Ockham’s Mark Todd talked about here: http://www.radionz.co.nz/national/programmes/saturday/audio/201765712/playing-favourites-with-mark-todd

    Maybe big listed Aussie developers should be welcome in the mix. But would like to see some more innovative small-scale players too.

  5. Here’s an interesting take on how they do it in Australia: http://www.domain.com.au/news/selling-entire-blocks-of-houses-to-developers-is-the-way-of-the-future-agents-20150814-giynqh/ This sort of thing has been going on for a while – family were involved in a similar deal over 10 years ago.

    I am pretty sure that in some areas, developers can also force the sale of small land holdings if they own the rest of the block – on the basis that they dont want an old Granny blocking a cohesive redevelopment of a much larger area.

    1. Fascinating: Clever buggers! But of course the planning regs have to allow that up-zoning and despite the nonsense written by Oarsman and the panicked reactions of local politicians and others that just isn’t possible over almost all of suburban AKL including under the Unitary Plan.

      1. The one my family was involved with was a collection of about 20 farms in a green belt which was about to be rezoned to residential. Real Estate agents would go door to door and get everyone signed up, then try find a developer. I think it fell over twice before it finally got sold. That whole process took about 10 years.

    1. I’d say yes – most of the money is going to be spent on builders, architects, GST, company tax and all the other costs which are firmly included in the NZ value chain. After all that, the developer takes a cut which could be argued as going offshore and not contributing to NZ (it would show up in our GDP, but not our GNP), but that’s really the only difference. The developer might end up with a 20% margin before tax, so the rest is staying in NZ.

  6. Does it matter the ownership structure of the developer? Isn’t the result what counts? Unless of course, we get better architecture with the listed companies which seems to be the case from the examples above. But the most important thing to any property developer is short term return on investment and NZ may not be as attractive in that respect as other locations.

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