Oh, that’s going to stuff up housing projections

I’m laughing because good quality evidential research always shows up how piss-poor local government is.

Len Brown and his cronies at Auckland Council have sold a storm on their compact city and the rate of intensive development that is occurring. It’s always been fanciful.

Plans for 28 new Auckland apartment blocks containing 1900 units have not gone ahead as originally planned, a real estate expert says.

Zoltan Moricz, CBRE research head and senior director, said changes had been made to schemes for about 15 per cent of planned new stock.

Some of the new apartments might never be built, but plans could also be on-sold to other developers or perhaps the projects would be down-scaled, he said.

Some of the planned projects were badly located, too expensive or not what the market wanted, he said.

Moricz said people should not see the trend as indicating Auckland’s apartment market was heading for the doldrums as most new Auckland apartment schemes were proceeding as planned, bringing thousands of new units to the city.

“We don’t see a 15 per cent abandonment rate for project launches as a materially adverse outcome given the diversity of active developers, apartment product and locations. A prominent theme behind abandonment has been the wrong product, at the wrong location, at the wrong price.

“The market is discerning. Success requires a careful balance of having the right specification and type of product for a given location at a price that the market will accept while still allowing development profit.

Moricz would not name any ‘abandoned’ projects.

I bet you that two scenarios offer a sound explanation about what is going on:

1. Land bankers and foreign land bankers are obtaining resource consents to allow them to obtain a higher land valuation for a quick flick money spinner, or to ensure they have done enough to satisfy OIA criteria on investment in which case they will now do nothing;

2. Construction prices are killing off some projects as material and subcontractor costs rise thus screwing financials;

It’s probably a mix of both.

Either way, this news doesn’t bode well for Auckland Council’s utopian dream of a compact city.

Firstly, it undermines Auckland Council’s estimates of how many dwellings will be built in coming years and raises questions about the reliance Council have had on a project typology (apartments) that is universally and historically troublesome.

It also shows just how temperamental and unreliable the apartment market is.

If this is the research as the boom time approaches 12 noon then it’s all looking like custard for a compact Auckland in 18-24 months’ time. There will be lots of projects unbuilt and not enough houses built.

In the meantime Auckland Council continue to stiff greenfield subdivisions in the hope that they will see lots of apartments built.

See an emerging problem here? I do.


-NZ Herald