Demand for Auckland Apartments
Renown Weekend Herald columnist Brian Gaynor says New Zealand is reluctant to move away from the quarter acre paradise and it’s evident in the low percentage of building consents for Apartments.
New Zealand only needs to look across the ditch to see where Auckland is heading and it’s apartment living – not the quarter acre dream of yesteryear. The major east coast cities of Australia have an abundant supply of apartments and yet the latest statistics confirm building consents for apartments is up to 50 percent of all dwelling consents. Compare this to Auckland’s statistics where apartment building consents at only at 20 percent of total dwellings.
So what’s holding up the consents? From an article on NZHerald:
“The low level of apartment construction is due to the high cost of regulation and resource consent, as well as our strong bias towards houses. These costs were analysed in a recently released research paper by Arthur Grimes and Ian Mitchell “Impact of Planning Rules, Regulations, Uncertainty and Delay on Residential Property Development.
The detailed study, which has a strong Auckland focus, looked at the regulations and resource consent costs associated with the subdivision of land and the construction of stand-alone dwellings and apartments.
The report concludes that regulation and resource consent adds between $105,000 and $180,000 to the cost of an apartment unit, including the required deck, while they add between $32,500 and $60,000 to the cost of a house.
Additional costs of between $105,000 and $180,000 are a huge disincentive as far as the profitable development of affordable apartments is concerned.”
These costs don’t affect the ability to sell mid to upper end priced apartments however they do impact on the profitability of developing low end stock.
Grant Hoey of Auckland Cash Flow Apartments says his clients have been doing their bit by providing refurbished apartments. His clients typically purchase apartments undesired by owner occupiers. The apartments are renovated to a reasonably high standard then on-sold to home owners. The turn around is usually less than two months. Replenishing existing Apartments is a fast growing business in Auckland and Grant Hoey has been mentoring investors on best practices for years.