Property Insider: Kāinga Ora builder owes $5.5m to 137 subcontractors, new companies appointed to finish 95 state units; house prices 12.9% below market peak; when will that long-awaited new SkyCity hotel open?
This apartment site was shut when the Herald visited today and subbies are complaining about not being paid. Video / NZ Herald
Who’s going to step onto those partly finished Auckland and Wellington state apartment sites to finish them? House values are about 13 per cent below what they were in late 2021 but what’s the outlook now? When will Auckland’s new Horizon Hotel finally open?
The company which enteredvoluntary administration when it was building 95 units for Kāinga Ora owes 137 subcontractors $5.5 million, according to the Crown housing agency.
But some good news on the 95 units: new contracts have been struck so that many of the 91 under-construction apartments in Auckland and Wellington can be finished and those needing state accommodation will be able to shift in soon.
Patrick Dougherty, Kāinga Ora construction and innovation general manager, released a statement to Property Insider yesterday, outlining the fallout: “In total there are 137 subcontractors and suppliers owed money by Build Partners totalling $5.585m, excluding GST.”
Patrick Dougherty of Kāinga Ora. Photo / Michael Craig
Build Partners, whose chief was Steve Mikkelsen, was contracted to deliver four social housing projects comprising 95 units of which 93 were apartments and two were community space areas:
Corner Great North Road/Cadman Avenue, Waterview - 40 units and a community room;
Hindmarsh Street, Johnsonville - 29 units and a community room;
Fowlds Ave, Sandringham - 15 units;
Corner Hendon Ave/Hargest Terrace, Ōwairaka - nine units.
“The process of Kāinga Ora validating money owed to subcontractors has been completed and payment to subcontractors and suppliers where we have completed the transfer of their contracts with Build Partners has commenced,” Dougherty said.
Kāinga Ora has decided it will manage the completion of the Johnsonville development, “given this project was well advanced. Construction has recommenced on this site”, Dougherty said.
Steve Mikkelsen of Build Partners appeared in a video showcasing businesses which were construction accord beacons.
The Hendon and Hargest development is now in the hands of one of New Zealand’s largest group of house builders. Signature Construction has possession of the site and has started construction, he said.
At Auckland’s Fowlds Ave, Kāinga Ora has contracted Precision Construction which has possession of the site and is working there.
On the Great North Rd/Cadman Ave project in Auckland, Kāinga Ora has sent out a request for proposal to selected build partner panel members. That is due for response by today.
Last month, Kāinga Ora took possession of all four sites after Build Partners had not paid their subcontractors.
Build Partners' state housing project in Johnsonville. Photo / Build Partners
Build Partners, and a number of other subsidiary companies under Property Partners Group, have since entered into voluntary administration. Market conditions have changed significantly in the last 18 months, and it is a sad outcome for these companies.
“This does not change our commitment to pay subcontractors the money they are owed on the social housing developments, and we will continue with the building of the much-needed new state homes,” Dougherty said.
“As at close of business Friday, May 10, we have processed 25 per cent of novated agreements and are continuing to complete that process as quickly as possible as they are returned to us from the subcontractors,” he concluded.
Work by Build Partners on new state homes for Kāinga Ora on Cadman Ave, Waterview. Photo / Jason Oxenham
House values 12.9 per cent below market peak
Quotable Value today released new data showing the national average home value is now 2.7 per cent higher than at the same time last year, but still 12.9 per cent or $136,993 below the market’s peak in late 2021.
When an entity like QV sends out the latest house price index headlined “winter is coming” and cites high interest rates, inflation, and rising unemployment, you know it’s time to put on another layer.
QV operations manager James Wilson said: “What little momentum the housing market still had going into autumn appears to have all but evaporated now. Home value growth has largely stalled across much of the country, reflecting difficult economic conditions that aren’t getting any easier and aren’t likely to [ease] anytime soon.”
A flat market is to be expected, he said, citing interest-rate pressure finally beginning to ease later this year.
“In the meantime, mortgage holders are finding ways to hold on and banks are being supportive where possible,” he said.
Volumes are likely to fall even further as the winter sets in.
“The overall trend appears to be a property market that is in a sort of stasis until conditions improve, which almost certainly won’t be until after winter,” Wilson said.
On May 12, the Heraldreported big mortgage stress: one in every eight Auckland homes going on sale is at risk of selling for a loss or minimal profit.
The data from property website OneRoof shows 13 per cent of almost 11,000 Auckland homes listed for sale in recent months were purchased during the market’s boom period from September 2020 to January 2022.
No opening date yet for Auckland hotel
The Horizon Hotel, beside TVNZ on Hobson St.
Will it open this month? It seems most unlikely at this stage.
No announcements have been forthcoming about SkyCity Entertainment Group’s new five-star Horizon Hotel, now being finished by Fletcher Building.
That project has been dogged by further delays and we’re sure not going to mention the October 2019 fire again.
It seemed quite hopeful in November when the now-acting chief executive of SkyCity Callum Mallett announced a March 1 opening date.
No one is saying anything “concrete” at this stage, which is always worrying when completion is near and people are putting dates in their diaries for a major event like this one.
It should be a big celebration when it finally happens.
Property Insider reported hopefully last month: “Some good news also: the new Horizon Hotel is tentatively due to open next month then the NZICC is due to be finished later this year.”
Seems unlikely that we will see the rising of the sun at Horizon this month at this point.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
