Developers bank on plan

CATHERINE HARRIS
Last updated 05:00 28/04/2013

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The developer for one of the country's biggest residential projects says it is possible smaller players are landbanking Auckland properties in the hope that the city's new plan will intensify housing.

Nigel Richards, general manager of McConnell Property, said it would "not be outside the realms of belief" boutique developers were eyeing up land for the future.

"At a smaller scale, there's probably lots of people looking at the unitary plan, saying ‘Over here, this particular parcel of land can support four dwellings on it. The unitary plan's sending signals I could put seven on it. Hey, the best thing I can do is grab that piece of land and wait'."

With land in Auckland becoming precious and a shortage of houses on the market, a North Shore mortgage broker said she has seen developers outbidding ordinary buyers on larger properties.

"Essentially, developers are buying any property that has subdivision potential and you mostly find those in the older suburbs where first-time home buyers traditionally shop," LoanPlus broker Christine Lockie said. Offshore backers were also involved, she said.

"We've heard it from a lot of local developers that they can't build to the same price as some of the offshore developers can build. I think they bring in their own workforce, things like that."

Richard Baker, a mortgage and insurance adviser in east Auckland, said developers were also active on his side of the city.

"Anything subdivisable's gone, it doesn't get to the market at the moment.

"The builders know they've got to pay retail, but with the market as bullish as it is, they are feeling quite comfortable that the ongoing [capital gain] is going to protect them."

Traditionally, developers rarely pay top dollar for a property but Auckland's soaring prices and the city council's draft unitary plan may be boosting their confidence.

The plan supports greater intensification, with proposals for reducing the minimum amount of land needed per building.

Glen Cornelius, of planning consultancy Harrison Grierson, doubted "landbanking" was going on around the unitary plan because smaller developers usually did not have the resources to hold on to property for long. "They might be able to add a couple more sections into a possible development but not necessarily make massive returns because the unitary plan is still a reasonable way off and it's still uncertain."

Richards, whose company is developing the 1200-lot Addison housing complex in south Auckland, said the unitary plan was a gamechanger.

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It potentially doubles or even trebles the capacity of the city's "brownfield" land - undeveloped land within its boundaries.

But as far as he knew, large-scale developers were not landbanking as they were too busy trying to understand their current situation.

There were, however, some private interests who had long held property just outside the urban limits. They owned parcels with potentially "hundreds of hectares," in the hopes that the city would move outwards.

If that happened, the "value uplift would be quite incredible", Richards said.

But with the council championing intensification, these investors were now running a high risk that the city would go upwards rather than outwards.

"All I would say is it's going to be interesting now for those parties who have had that patience, and employed that capital, and are still waiting to see the value adjustment,"Richards said.

- Sunday Star Times

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