The Fairway Bay Gulf Harbour property development north of Auckland, a $550 million project that provides work for 500 people, would never have happened without Chinese investment, says a consultant to the development company.
Top Harbour, a syndicate of Shanghai Zendai Property, Shanghai Pengxin’s Jiang Zhoabai and local firm Westlake Investment bought Jamie Peters’ Gulf Harbour development out of receivership in August 2012 for $35 million, transforming it into an eight-year, $550 million project that has created more than 130 house sites and plans to double that within 12 months.
“When we started this two years ago, there was nobody in New Zealand who could do it – I know, because I went around and asked everybody if they wanted to,” Top Harbour project consultant Michael Webb-Speight said. “These guys have come in, stuck their money in, and we’ve got probably 500 people working over on the site in various ways – consultants, builders, digger drivers and what have you, and they’re all living in New Zealand, and all kiwis, and they all pay tax – well how good is that.”
The Top Harbour development is cash-funded, although it has recently taken on some development finance at a very low loan-to-value ratio from lender ASB Bank.
Auckland’s housing market has posed a number of problems for policymakers who are struggling to facilitate a rapid building programme while demand continues to accelerate. The Reserve Bank has estimated Auckland has a short-fall of between 15,000 and 20,000 properties to meet population growth and new consents are running behind the 10,000 needed to keep up at an annual 7,500. Chinese investors are sometimes cited as helping to drive up prices.
The make up of the Top Harbour group is about to change, after state-owned China Orient Asset Management announced plans to buy 50 percent of Hong Kong Exchange-listed Shanghai Zendai, which plans to sell its stake in the New Zealand developer to another, unnamed Chinese investor, Webb-Speight said. The ownership change won’t impact Gulf Harbour, he said.
The development is through three stages, with 132 lots completed with different price points. Of the first stage, 50 of the 65 completed lots have been sold with most in the $700,000 to $800,000 price range. The second stage has 28 lots priced between $1 million and $2 million, while the third stage has just been completed with 39 lots priced between $600,000 and $650,000.
“In the first three we’ve tried to create a range of products and range of values so that we can address a wider part of the market,” Webb-Speight said.
Ten houses have been built, another 15 are under construction and more than 30 are under design or waiting for consent.
Webb-Speight said the biggest hold-up for construction was the lack of resource, with local housing companies building more than 100 houses a year, more than twice what they were doing three years ago.
While a rising population, swelled by inbound net migration, was fuelling demand, Webb-Speight said banks’ lending policies were keeping the market running hot.
“While banks are happy to lend money to people then the market will continue,” he said. “It’s fed naturally by this immigration scenario, that’s great, it creates demand, but the bank lending policy is the whole key.”
Once the next housing stage is completed, the development will look at working on an apartment area in the middle of the area.
“It makes sense to us to fill in the green paddocks first, create a bit of critical mass and get all the rest of the stuff and then see if we can get the apartments to work,” Webb-Speight said.
“It’s really how do we make 585 apartments, that’s a lot in any market, and we don’t think you can bring all that to market in a short period of time. It needs to be staged and developed.”
The development plans to create 1,000 lots, though Webb-Speight said that’s a dynamic number and could change as the project continues.
By PAUL MCBETH
Source website link