Plans for Northcote's regeneration - some buildings are finished. Photo / Supplied
Once, traditional weatherboard state homes stood on the land owned by Housing New Zealand but soon pre-built units from Asia will be stacked up there and sold to private owners.
Vietnamese apartments are planned for a state-owned North Shore site in what the importer says will be New Zealand's largest off-site manufactured housing construction project.
The scheme is part of the wider Northcote regeneration where some of the state land is being sold for private development. On the site where Vietnamese units are going, all state land will be sold privately, although in a nod to Government policy, some new homes there will be discounted from market value and sold as affordable KiwiBuild units.
Dozens of state homes on traditionally large lots were demolished to make way for this new intensive apartment project near the Northcote shopping centre.
And the Vietnamese are seen as part of the key to unlocking the potential of the land - as well as Goldman Sachs.
Asian-headquartered TLC Modular, partly owned by Goldman Sachs, plans to import 182 fully-built-up housing units on four ships arriving this winter from Vietnam and stack places on top of each other on the corner of Lake Rd and Fraser Ave.
Few state houses were once there but soon the big apartments will be there - and private buyers will get the state leg-up via KiwiBuild.
Kāinga Ora is still involved via KiwiBuild, the land is still owned by a KO entity and KO's involvement is ongoing via KiwiBuild.
Jason Holding, a project manager at TLC in Auckland, said preparatory groundworks started last year for the six-level project on two Kāinga Ora sites on Lake Rd.
TLC will import units made outside Ho Chi Minh City, he said.
TLC says it builds more than 100 modules a month, has a 2.5ha factory and 4.5ha of warehousing and storage. It is partly owned by international financial giant Goldman Sachs after what it called a "recapitalisation" exercise a few years ago.
Not all has gone well for Kāinga Ora with modular construction and one of its biggest failures was right beside the TLC site.
The Herald reported in November how an Australian modular apartment business that won $20m of Government state housing agency contracts has gone into liquidation, abandoning two Auckland sites with partly finished homes.
Integrated Modular Build, wholly owned by an Australian, was building 50 new apartments beside where TLC is now working now but the company failed, had a $1.6m deficit and left sites in sorry states and unfinished buildings. Kāinga Ora said last year it had awarded $10m of construction contracts to the company on Kervil Ave, Te Atatu and $10m of work for a super lot on Tonar St, Northcote.
"Another one bites the dust," said one industry observer of the KO failure. "It's a bit of a sad tale: prefabricated timber components flat-packed from Australia, meant to fly together, be high-quality and cost about $4000/sq m."
Instead, the cost was around $8000/sq m, had taken two years since piling and because buildings leaked during construction without the roof going on fast enough, parts of the prefab timber components needed replacement, he said last year.
Shane Brealey, of NZ Living, which has built a 102-home Fraser Ave project at Northcote 18 months ago, is sceptical about the modular places.
"We built that in a little over 14 months: one new home for every 2.7 working days using on-site production techniques. Why anyone would want to take the higher risk, higher cost and lesser quality of off-site manufacturing solutions is beyond me," Brealey said of the TLC modular method.
In his view, a much higher risk than is needed is being taken via the Vietnamese units and KO has already been burnt once at Northcote, he recalled.
But Hamish Aitken, of TCL Contractors in Auckland, was today upbeat about the new project in two blocks at 203-225 Lake Rd. The modules are being built at Vung Tau, 100km southeast of Ho Chi Minh City, he said.
"These apartments are being manufactured off-site at the company's factory in Vietnam and will be shipped to and installed at Northcote in several deliveries between July and September. Then, finishing work will be carried out.
"The land is still owned by Kāinga Ora entity but title will transfer to a TLC entity before apartments are sold to buyers," Aitken said.
"The developer, TLC Developments, is a Singapore-registered company in which Goldman Sachs is the majority shareholder," Aitken said.
Because Singaporeans are excluded from our foreign-buyer ban, no Overseas Investment Office approval will be needed for the sale, he said.
The Elevation apartments would have basement car parking below ground level, community spaces, a cafe, landscaped areas and roof terrace gardens as part of the Northcote urban regeneration.
Aitken said 72 apartments would be sold as KiwiBuild.
"We have a very strong relationship with Kāinga Ora on this project due to the KiwiBuild components. But we're also building 110 private apartments," Aitken said.
"The Tonar St site was very different to what we're doing," he said of the financial failure nearby.
"Part of the Tonar problem which I gleaned from your article was that those places got wet during construction. But our units will be pretty much watertight, more finished. We don't see Tonar St as the same as what we're doing at all," Aitken said.
The construction contract was $70m to $80m and the end value of the buildings with a 6000sq m footprint would be up to $110m, he said.
The modules are planned to come complete from Vietnam with all fittings and fixtures installed: kitchen units, benchtops, floor and wall linings, electrical cables, plumbing, light fittings and switches. Interiors are decorated so the units only need to be connected to stormwater, electrical, wastewater and internet services.
"And we have to put on the exterior claddings, balconies and all the roofs here" he said.
Fisher & Paykel kitchen appliances from the Haier factory in Malaysia, showers and toilets are also to be installed when they arrive from Vietnam, Aitken said.
Around 580 modules will make up the 182 apartments. Those modules will be craned into place on-site and then services will be connected.
Naylor Love won the groundworks contract and started there last July, building the foundations, the underground car parks and laying the concrete slabs which the modules will be placed onto.
In 2019, TLC Modular built the Cosa hotel in Christchurch, Aitken said. That was its first New Zealand project. The hotel is now called the Carnmore Hotel and is on the corner of Salisbury and Colombo St.
"The Northcote apartments are a good example of modular construction's advantages in apartment building in New Zealand, where developers can benefit from factory-controlled products that enhance the construction delivery process, which both the developer and builders can benefit from, for multi-storey residential construction," Aitken said.
"We can achieve a much higher specification for the cost compared with present traditional construction," he said.
TLC's first housing project in New Zealand is at Papakura where 64 homes are being assembled from Vietnam. Those arrived here late last year and work on a site is underway now.
The business was established in 2001, initially in the heavy steel fabrication sector. But knowledge gathered there allowed it to expand into modular construction.
Christian Hurzeler, Kāinga Ora's large-scale development director, said the Northcote project was an example of how the state entity was increasing housing availability to the public at both affordable and market rates.
"Northcote residents will get better transport links to the North Shore and central city, improved infrastructure, and new and rejuvenated public spaces. Elevation will have 182 apartments, of which 40 per cent will be affordable homes," Hurzeler said.
At Northcote, 380 older state homes would be replaced by 470 new state places, she said. But in its entirety, around 1700 KiwiBuild, state and private homes were planned.
Industrial projects dominate new supply, the study found, comprising 65% of new stock.