Clive Mackenzie, chief executive, Kiwi Property talks build-to-rent apartments and office space development at Sylvia Park. Video / Michael Craig
The Business Herald’s new column offers insight into what those on the inside of the property industry are talking about, what worries them, what they’re celebrating, the rises, the falls and who’s doing what.
Sylvia Park milestone
Naylor Love headed by Rick Herd said last week it had reached thetop floors of the three new $200 million build to rent towers at Sylvia Park. But hitting the top for client Kiwi Property didn’t go off without a hitch.
“It was third time lucky for the dismantling of the two tower cranes after high winds scuppered our plans on the first two attempts,” the builder said, referring to the Smith Crane & Construction giants.
The builders had a 400-tonne mobile crane with 100-tonne of counterweights, as well as a 40-tonne “assist” crane to erect the towers with 295 units, up to 12 levels tall.
The giant new complex beside the mall has 119 car parks tucked beneath in basements, but Kiwi chief executive Clive Mackenzie says Sylvia Park has many buses daily, a train station and is between two motorways: SH1 and the south eastern arterial.
The towers were designed by New Zealand’s Ashton Mitchell with Australia’s i2C.
Sinkhole hell - what if it was your place?
Watercare had by October 17 completed a bypass around a blocked sewer main, which saw a massive sinkhole open, under St George's Bay Rd, Parnell, Auckland. Photo / Watercare
When it comes to Auckland’s biggest new sinkhole, spare a thought for Masfen Group, particularly father Peter Masfen and son Rolf Masfen because it is one of their properties in Parnell which was so blighted by the dreadful drains and a 13m deep chasm which opened up in the earth.
They own the retail Parnell Quarter, 79 St Georges Bay Rd, right opposite Mansons TCLM’s stylish black headquarters at the dead-end street off The Strand.
The wealthy family-owned business wasn’t talking to Property Insider about the hole and its effects but Deputy Mayor Desley Simpson said the shops were open and a traffic management programme was ensuring customers could get to and from the shops. “It’s pretty tough on the retailers but I think they now know it’s the only way to fix it and if [Watercare] didn’t do what they have done, we’d have sewage everywhere.”
On the Masfens, healthcare, sustainable farming and commercial property are among their extensive holdings.
Ironically, their website is advertising car parks for monthly lease at guess where? Yes, that’s right, 79 St Georges Bay Rd. Price is by negotiation.
Parnell Terraces: Leasehold, leaks, litigation
Parnell Terraces in the Quay Park area. Photo / Michael Rehm
“The value is heading for zero,” says Parnell Terraces’ body corporate chairman Dr Michael Rehm, of the group of 81 townhouses on leasehold land near Auckland’s railway line in the Quay Park area.
He’s talking about the resale sums of units at 51 Ronayne St, on the corner of The Strand near the railway overpass. The homes have been mightily blighted.
Last decade it was the leaky building saga when it cost around $35 million to fix, up from an original estimated $11m.
Then a leasehold land rent shock hit owners in 2018 which nearly doubled demands to $1.3m in annual payments. That’s the standstill, do-nothing cost of just owing a place on that land.
Then the floods at the start of this year let water into the ground floor of many places.
Litigation is ongoing between the owners and a local iwi property development and investment company.
What else could go wrong for owners, paying around $16,000 each as the ‘no-improvement’ cost of their places being on land they don’t own?
Hard to imagine.
Yet body corporate chairman Rehm is a true property expert, as well as a Parnell Terraces’ townhouse owner. He’s one of the more qualified people to head an owners’ committee of a body corporate - and certainly one locked into litigation with Ngāti Whātua Ōrākei’s Whai Rawa Railways over ground rent payments.
Rehm got an architecture degree from Houston University in the 1990s, but in 2004 was approached by his PhD supervisor Dr Fred Forgey to join Auckland University’s Business School’s property department. He is a full-time property academic and coordinates courses in building, construction, property issues and trends, geographic information systems, and property analysis.
Dr Michael Rehm, chairman of the Parnell Terraces' body corporate and an Auckland University academic. Photo / Michael Rehm
So how could such an expert buy what turned out to be a leaky townhouse on leasehold land? For Rehm, despite the downsides, it’s partly the convenience of the location because both he and his wife work at the university. He takes a somewhat sanguine view of what’s going on.
“My family and I bought our unit in April 2006 and rented another unit at Parnell Terraces for one year before that,” he recalls.
“The rental served as our first home when immigrating here in early 2005. I was an academic but a very young one at 29 years old when I arrived. It wasn’t until years later that I began researching into leaky building stigma and gained an in-depth understanding of weather-tightness failures.”
On the leasehold front, he values a short walk to work and prefers not to get a big mortgage to buy freehold.
“Like all leasehold owners now, we regret that decision but that is life,” Rehm says.
Parnell Terraces - leasehold land, leaks, then litigation. Photo / Michael Rehm
“Like anyone else, we did not have an accurate idea as to how much the ground rent was going to cost us. It was ground rent free for the first five years we owned our terraced home. We and all other lessees in Quay Park realised we were in for a rough time when the initial ground rent amounts were determined by Robert Fisher back in 2012.”
Under his chairmanship, Parnell Terraces’ owners have proposed a novel approach to Whai Rawa, where each owner pays the ground owner their leasehold directly, instead of the body corporate collecting it and passing it across.
Some owners are in dire financial situations, yet the litigation continues.
The owners’ next rent review will be in August 2025. Will the property market have recovered and values be rising again, driving the $1.3m annual leasehold bill up?
Depreciation - any hopes with the new Government?
Where to with the commercial building depreciation, with an incoming Government? Property Council chief executive Leonie Freemansaid pre-election that depreciation was critical for the future health of New Zealand’s built environment.
Rachel Piper, a KPMG New Zealand tax partner, doesn’t anticipate a big overhaul with an alliance coalition.
“Our expectation is that tax depreciation will no longer be available on commercial building structures given the National Party announcement on August 30, as part of their tax package announcements, that they will end commercial building depreciation.”
The announcements said that it was expected to save $525m on average per year, she told Property Insider.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
