Going up rather than out

As more people flood into Auckland's inner city, apartments will be key to helping meet housing demand.

Gavin Lloyd, National Director of Residential Projects for commercial real estate services and investment firm CBRE, says the 'quarter-acre, half-gallon, pavlova paradise' - a 1970s author's description of New Zealand and its love of a house on a big block of land - has become fundamentally unaffordable for many.

Instead, as Auckland grows and matures, the city is spreading up, rather than out, as city fathers build a city centre made for living as well as working - creating a different kind of desirable housing.

"Property prices in the city are going up as it becomes a more desirable place to live," he says. "The number of people living in the city centre has tripled in the last 12 years, from 10,000 to 30,000. We're now seeing people coming in their droves."

City planners' solution to the prospect of up to a million new Auckland residents over coming decades is the Unitary Plan, proposing a denser city core rather than continual spread into greenfield areas.

"We are seeing more activity [apartments] in the suburbs," says Lloyd, "but the main focus will be inner city or city fringe. That's if developers can unlock land for further development and that's a tricky issue; only about 25 per cent of large tracts of land identified as possible sites are practical enough to be developed.

"They key is to go up; air is comparatively free whereas if you go out, there are huge costs in terms of infrastructure and big traffic problems. We're talking affordability."

The hidden message is that, even as inner city apartment prices climb, they will never be cheaper and the desirability of the inner city is increasing.

"We're blessed in Auckland that our city centre's waterfront setting is absolutely world-class. The council has made great progress towards Auckland being the world's most liveable city. It's already a far more attractive place to walk around than even just a few years ago.

"They've been creating a city centre; not a place where you go to work and then go off elsewhere. It's become a place where people live, work and play in the same area.

"I think people are waking up to the fact a new Auckland is emerging. That, combined with price sensitivity and the high-quality developments now in the system are making a broader range of people consider apartment living and causing extraordinary inner city growth."

More companies are basing corporate headquarters in the inner city, growing jobs which also fuel apartment demand. The growing inner city population base stimulates businesses such as bars and cafes to stay open later, contributing to the inner city atmosphere.

Lloyd says some 6,000 new Auckland apartments will be built in the next three years, roughly half in the central city, where projects tend to be larger: "They also tend to sell faster, as there is more buyer demand. Better quality CBD projects have achieved 90 per cent sell-outs three months after they've been launched."

He says 80 per cent of the overall city apartment pipeline is pre-sold. Buyers are becoming more comfortable with the concept of buying off the plans with the level of pipeline sales exceeding sales of existing stock earlier this year.

The Auckland region swelled by nearly 30,000 people in the year to July 2015, about half of the country's national net migration.

"Residential consents for both houses and apartments in Auckland were relatively muted between 2008 and 2013, despite Auckland's population growing steadily through natural growth (births minus deaths) and city-wide net migration of 44,500 people over those six years.

"The current apartment pipeline would barely cover last decade's growth, let alone the growth we are seeing now with record net migration into Auckland."

"Buyer demand will continue to outstrip supply pipeline for the foreseeable future," Lloyd says. "If you like a particular area, look for upcoming projects and be one of the first to view."

Developer Marty Kells who is behind the new Maritime Apartments currently being marketed, knows more Aucklanders want to move to the inner city to enjoy the lifestyle and cut commuting time.

That's why he was so excited to secure the lower Anzac Ave site that has been owned by the Maritime Union. It's on the doorstep of the waterfront in downtown Auckland as well as being freehold and north-east facing.

The Maritime display suite at Level 2, 29-31 Anzac Avenue is open now for pre-sale preview. Viewing hours this week are from 12pm until 3pm daily. Find out more at www.maritimeapartments.co.nz

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