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Three years after a $300 million partnership was struck between the NZ Super Fund and Tauranga-headquartered Classic Group, no titles have been issued and not a single new home has been built.
That is despite the 2021 announcement from the parties that they were joining to meet thechronic demand for quality, affordable housing.
On October 20, 2021, the Super Fund and the pioneering Bay of Plenty residential business struck a deal to build thousands of new homes via the Kaha Ake (Stronger Together) partnership.
But asked by the Herald for a progress update this week, Kathryn Scholes, Classic Group’s marketing, brand and communication general manager, revealed no physical progress.
Classic Group director Peter Cooney. Photo / George Novak
“Kaha Ake’s projects are all at varying stages of the land development process and no titles have come through yet for build partners to commence the construction of homes. The first of these are due early 2025,” she said.
The partnership planned new homes in the Waimanawa project at Warkworth but that was running late, Scholes said.
“That is behind its original timeline as communicated in October 2021, and we are still going through the plan change process. Unfortunately, this is not unusual when working with the current Resource Management Act,” Scholes said.
“Our plan change application was accepted in September 2023 but the process then became more complicated following the release of Auckland Council’s Future Development Strategy in mid 2023 and Watercare’s subsequent response to this.
“However, investors remain very confident in the merits of the proposal Kaha Ake has put forward and we are looking forward to making good progress next year,” Scholes said.
Asked to comment on the partnership, the Super Fund deferred to Classic.
The fund holds an 80% share in the partnership.
NZ Super Fund direct investments manager Hishaam Mirza. Photo / Supplied
In 2021, when the deal was struck, Super Fund direct investments manager Hishaam Mirza said the investment was part of a broader strategy to increase the fund’s exposure to real estate.
“We believe our capital can help create a breakthrough moment for a sector weighed down with interconnected challenges of affordability, land supply, lack of scale, poor infrastructure and compliance.
“In line with our commitment to responsible investment, sustainability will be at the forefront of Kaha Ake’s approach.”
Real estate investment was attractive in New Zealand, he said previously.
Scholes said 1300 housing lots were being managed by the partnership through the consenting or land development process.
These are in Warkworth, Matamata, Fielding and Queenstown. The partnership bought a 37ha block of land in south Warkworth, where it expected to develop 530 affordable new homes.
The partnership’s first development was expected to be in Warkworth.
“Over the coming years, the partnership expects to achieve a development pipeline of upwards of 3000 sites for new homes,” the fund said in 2021.
The partnership was based on a $300m commitment.
This month, Classic director Peter Cooney said the residential market downturn had prompted Classic to cut staff numbers by 90 in the past 18 months.
“The market is crap and has been for the last two years,” he said.
Classic had about 330 staff in 2022 but was now at about 240, due to a combination of not replacing those who left and making others redundant.
About 60 staff had been let go, while the others were not replaced.
Project managers, marketing, drafting and other staff “right across the board” no longer worked at Classic due to the housing downturn, Cooney said.
High interest rates, material prices up 40% in the past three years, lack of land and high council costs were among the reasons demand for new housing dropped, Cooney said.
