City apartments are finding favour with investors again, and Auckland looks to be on the cusp of another building boom.
By Susan Edmunds
Construction is under way of the Sugartree apartment development, the first major apartment development in the centre of Auckland since the global financial crisis. Developer Darren Brown said the crane that recently went up on the site was one of the biggest in New Zealand. “It’s a good sight for the city.”
The development will eventually comprise 495 apartments. Another apartment block, Urbis, will start to be built soon after. Sugartree stage one apartments will sell from $280,000 to $580,000 in the first stage and carparks will cost an extra $60,000.
Stage two is also selling and so far 30 units have been snapped up off the plans.
Brown said he expected about 25% of the apartments would end up being owned by investors.
The latest Crockers Property Investment Index survey showed that there had been an increase in investors’ intentions to purchase apartments within Auckland’s CBD. More than 20% now said that was where they were considering purchasing a property.
Brown said interest was strong in the development.
He had noticed more first-home buyers expressing interest, who wanted to purchase off the plans as a way to beat the new loan-to-value restrictions that make it hard to get a mortgage with less than a 20% deposit.
“They only pay 10% to start and if prices go up, they get the benefit of that. They don’t have to pay the second 10% until completion so there’s time to save it but they’re already in the market.”
Standalone houses near the city were out of reach for a lot of people, he said, so new apartment developments were a logical solution to the housing shortage.
City Sales’ Martin Dunn said there were four or five new developments in the pipeline that would take the stock of CBD apartments from 26,000 to 28,000 over the next year.
But he said the last two months’ turnover had been a bit slower as the America’s Cup kept a lid on the market and LVR restrictions made it harder to get loans.