Leading property owner Kiwi Property has pushed the go button on a $221 million apartment development for long-term rentals at Sylvia Park shopping centre in Auckland, with plans for hundreds more rented apartments.
It is by far the biggest "build-to-rent" development in the country with the others that have been developed only about 40 to 50 apartments alongside apartments for sale.
Kiwi Property announced today a 295-apartment complex will be developed at Sylvia Park, the country's largest mall, hundreds more were planned there, and it was seeking resource consent for 245 apartments for long-term rental at LynnMall.
Build-to-rent developments are big overseas, in the United States and in the United Kingdom, but are only just starting in New Zealand where apartment blocks have typically been built for individual apartment sales rather than rental.
READ MORE: Kiwi Property waits for Government on interest deductibility after securing consent for big purpose-built rental apartment block near Sylvia Park Kiwi Property steps up its programme to reduce reliance on shopping centres, as profit rebounds Shopping mall and office landlord Kiwi Property’s $3b plus portfolio has partly rebounded in value after falling a year ago
Building apartments for rental has become a key part of Kiwi Property's mixed-use strategy to diversify and maximise the use of its four big key shopping centre sites, Sylvia Park shopping centre, Sylvia Park Lifestyle which is big box retail, LynnMall and The Base in Hamilton.
Shopping malls and retail outlets are under pressure from the development of online shopping. Adding more buildings and people to the shopping centre sites creates a bigger customer base for the centres.
Chief executive Clive Mackenzie said Sylvia Park could take 1200 apartments for long-term rental over the next 10 years and LynnMall 600. There was capacity for even more "in time".
The Sylvia Park complex would have studio, one, two and three-bedroom apartments, and would offer residents the security of long-term tenure, coupled with quality amenities, resident services and events, Mackenzie said.
"This is a proud moment for Kiwi Property, as we take a decisive step forward in the execution of our mixed-use strategy. We're excited to be moving ahead with build-to-rent today and are just getting started," Mackenzie said.
Enabling works were already underway at the Lynton Road site, with construction set to start late this year and renting to begin in early 2024.
It was seeking resource consent for a 25-story building at LynnMall which would include 245 apartments and office and retail space.
The Sylvia Park apartments' rents would be similar to rents in the market at the moment, maybe a bit higher, because it would be a high quality build and have great amenities, Mackenzie said.
It would offer a range of lease terms and give residents the right to break the terms when circumstances changed.
Already more than 50 per cent of Aucklanders rented and that would likely grow to 60 per cent, he said. Kiwi Property was looking to tap into the existing market also and offer a more sophisticated and higher quality rental.
"We think that once people understand the great range of convenience and flexibility and that long term tenure they are going to be really interested in renting our apartments."
Kiwi Property would be managing and leasing the apartments. It would be the party dealing with residents as it did with its shopping centre tenants.
The company's research showed the opportunity for 18,000 build-to-rent apartments in New Zealand.
Kiwi Property's focus was Auckland. But it saw potential for developing office and may be a hotel at The Base in Hamilton. The Base might have in the future some residential rental potential, "further off".
There might be an opportunity for residential development at Centre Place North in Hamilton which it owned in a joint venture with Tainui, but that was "down the line as well".
The company viewed "build-to-rent' as a huge growth area. In big international markets "build-to-rent" was the second largest property class behind offices. The apartments were developed, owned and managed by institutional landlords, specifically for long-term rental.
"We think it's really exciting. We're putting our money where out mouth is and investing in this great asset class which has proven itself around the globe."
The company was hoping the Government would adjust tax settings, so they could develop other "third party" sites. It was about making "build-to-rent" equivalent to other commercial and industrial properties for tax purposes.
Initially it was funding the Sylvia Park apartment development through debt but was offering two of its regional shopping centres for sale, The Plaza in Palmerston North and Northlands in Christchurch.
Kiwi Property has already built an office block, ANZ Raranga, at Sylvia Park, and is soon to start building a second, a six-storey office building, to be located near ANZ Raranga.
The $221m apartment development would target a stable net yield of about 4.5 per cent, and a 10-year property internal rate of return of over 8 per cent.
- Big Kiwi property company drops $250 million capital raise for office buildings because of Evergrande contagion fears
- New Development Returns, Along With New Holdouts
- Kiwi Keith Park commanded the Few in the Battle of Britain
- 3 Minimum-Wage Jobs Needed To Make Rent In Tampa Bay Area
- New supermarket subdivision will tap into demand in city's biggest suburb
- Exploring The Ultra-Luxury World Of Dubai Real Estate With Driven Properties
- Woolworths housing and supermarket development approved by Environment Court
- China’s property market runs out of steam as millions of investors demand their money back
- Taking your electric vehicle to America's national and state parks is getting easier
- Brookfield Property Partners LP (BPY) Q3 2020 Earnings Call Transcript
- 11 Deaths Put Focus on N.Y.C.’s Failure to Make Basement Apartments Safe
- Property prices propelled by the pandemic pressuring politicians worldwide
- 16 condominiums near a nature reserve or park that will help boost your mental health
- Beijing decided to burst China's property bubble. Now the world's most indebted company is teetering
- Evergrande crisis shows cracks in China’s property market
- Beware the backlash as financiers muscle into rental property
- China's biggest developer Evergrande is $300b in debt: Here's what overseas property investors need to know
- Building Super Uncovers NYPD Spying In New Brunswick
- China’s embattled Evergrande tries to pay bills with parking spots
Kiwi Property presses go on the country's biggest "build-to-rent", an almost 300 apartment development at Sylvia Park have 1065 words, post on www.stuff.co.nz at September 21, 2021. This is cached page on Europe Breaking News. If you want remove this page, please contact us.