Funding, price delays blamed for $200m Milford project shelving

High bank borrowing costs, falling house prices, low pre-sales and delays getting contract building prices prompted NZ Retail Property Group to stall its $200 million The Milford apartment/shopping project on the North Shore.

Sara Johnson, NZRPG marketing and communications general manager, said a combination of factors prompted the business to delay work building the 115-unit apartments and 20 new shops.

NZRPG said today that it would not begin work at the site this year and had repaid all deposits on apartments but would review the situation around March.

"In terms of the traditional channels of the Australian-based banks, there was a lot more discussions about borrowing the money than there would have been a couple of years ago," she said of NZRPG's trouble funding the big project.

"It's not to say they were not going to lend. But was it the best thing for the business? Not necessarily. Interest rates were higher," Johnson said.

"There's nervousness in terms of the real estate market," she said, revealing that deposits were only taken on 18 of the 115 units, amounting to sales of $50m of property, including the $6m penthouse.

Trouble getting prices from many different trades compounded the situation.

"We also had delays with the guaranteed maximum price contract with all the construction businesses. It's a big development. It was getting that fixed pricing over a period of time. As all the pricing came in, we were getting closer and closer to Christmas and we would have been starting early September, then October.

"And actually we are a retail centre owner first and foremost, so we will focus on the retail during the Christmas period and take another look at the project in March next year," she said.

Debbie Dunsford, co-chair of the Milford Residents Association which opposed the plans, was philosophical about the project delay.

"I guess it will happen at some point. Nobody has said, 'I'm really sorry it's not going to be built'. We've heard them talking about it for March or April next year. The main question is are they proceeding with the mall extension? It's nice to have the mall doing well," Dunsford said.

Imported Italian kitchens, a 170sq m heated outdoor pool and podium deck spreading across a third of a hectare were features of the apartments. Last year Johnson said that prices started from $1.7m for a 94sq m unit on ground level with a 35sq m deck. Prices were to rise the higher up the building, she said.

Construction was to start in February this year and the first residents were to move in around mid-2019. An apartment display suite was opened in the ex-ASB bank retail outlet in the mall, with a full-sized mock-up bedroom, kitchen, living area and bathroom.

Brett Russell's Dominion Constructors won the contract for the enabling works beside the mall as well as the main contract to build The Milford which was to be 11 levels tall.

Mark Gunton, NZRPG founder, planned the biggest reverse takeover on the NZX to fund his activities. But in July, his business - valued at around $575m - cancelled its play on listed Bethunes Investments, saying it would examine other options after the September election.

NZRPG founded the huge Westgate retail centre on Auckland's northwestern fringe. It has created a new Auckland town centre there and is planning a new mall and apartment blocks at Birkenhead's Highbury.