Shot In The Arm For Apartments
Building acceleration has been underpinned by the growing appeal of apartment living in the suburbs.
1 January 2023
Tracking by Colliers International research shows over the first nine months of this year 1,159 apartment units will be completed in Auckland. A further 1,963 should be finished before the end of the year.
If achieved, 3,122 new apartments will be added to the city’s inventory, making it only the third time since 2000 that more than 3,000 new apartments have been completed in a calendar year.
The development acceleration has been underpinned by the growing appeal of apartment living in the suburbs. This year 22 suburban apartment developments will make up 75 per cent of the regional total, up from 19 per cent in 2016.
Colliers International research associate director Ian Little says development intentions remain positive as illustrated by building consents which have reached a record 50,653 in the year to August. “The influence of multi-unit developments has continued to increase.
“On a national basis the total number of apartment and townhouse consents made up 49 per cent of total consents. In Auckland the influence of multi-unit development is greater still, accounting for 73 per cent of consents.”
The development sector’s ability to maintain momentum is, however, facing increasing constraints, including the cost and availability of credit to developers and buyers, and rising building costs putting pressure on margins. Little says as a result it is likely more proposed development projects will be kept on the drawing board or, in some cases, abandoned.
New apartments have continued to command premium values in comparison with that of older, existing stock. The higher values reflect not only the appeal of new apartments but also the impact of rapidly increasing building costs.
Analysis by Colliers research found the average asking price for new build apartments stood at $1,560,595 over the six months to June, an increase of 29.8 per cent on the June figure last year. The median sales value of all Auckland apartments dropped 5 per cent to sit at $665,000.
HELP FOR DEVELOPERS
To help developers, who might have to abandon projects due to rising costs of materials and labour and a drop in house prices, the government has introduced the Build-ready Development Pathway.
For eligible build-ready developments government assistance takes two forms:
• Purchasing the developer’s land under a government land acquisition programme; or
• Pre-purchasing or underwriting homes “off the plans” to reduce risk for developers and their financiers.