Ultra High-Spec Auckland Apartment Towers - Firesale approaching?

[SwissKiwi]

These are some seriously fancy digs - they must have had significant pre-sales to get off the ground.
Pacifica is well underway, International almost finished, Seascape is a massive hole in the ground.

https://thepacifica.co.nz/

https://www.seascapeauckland.co.nz/

http://theinternational.co.nz/

Similar to expensive buildings in Canadian/Australian/US developments where presale buyers have walked away from their deposits.

Why buyers are turning away from luxury property | Financial Times

https://www.ft.com/content/ea9c9abc-943d-11e9-aea1-2b1d33ac3271

Jun 26, 2019 - From Vancouver to Sydney, high-end apartments are lying empty despite prices ... Why China fell out of love with New York property · Real estate: ... forced to take over properties and deal with the sales slump themselves.

In Auckland today:
This Site to be liquidated at 50% loss - same developer as Pacifica/Park Hyatt.
https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=12249814

Could be first sign of trouble approaching.
I don't see NZ'ers having the inclination/cash to fill the gap left by foreign buyers.

[eri]

it's a nervy time for developers

eve apartments on 201 Hobson st. was cancelled a couple of years ago when not enough pre-sales were made

saba on 136 Fanshaw was also cancelled before being bought by someone else, currently in construction but under a different name?

st.james apartments on queen st also cancelled due to lack of finance/pre-sales

alexandra park luxury apartments cost and time blow-outs saw pre-buyers escape from pre-sale contracts

imho

a lot, but not all, of the current business uncertainty is due to the unpredictable policies of the coalition gov. and planning rules of auckland council

their voters/supporters want everything, but expect someone else to pay for it

in this case the coalition's ban on overseas buyers has, predictably, made it very hard to fund big flash apartments of the quality labour and council demand but kiwi buyers can't afford

and with all the recent bad building practices coming to light

we are not at all keen on off-the-plan purchases

look at how bad panels flying off victopia has made the korean construction industry look

so auckland will continue to under-build and our housing shortage will remain...

[Davo36]

SwissKiwi, wow, you haven't posted here for years! Welcome back.

eri, the overseas buyers can still buy apartments off of plans right? So the FBB shouldn't stop them really? I reckon it'd be the Chinese crackdown on money leaving the country that will be stopping things. That and the easy capital gains seem to have evapourated for nor.

Yes I agree it's a tricky time to develop though. You'd have to have balls of steel.

Regarding bad building practices, there's a few high profile ones in Aussie just now aye?

[eri]

yes, overseas buyers can buy off the plans

but then they have to sell as soon as it's finished

if people know you are forced to sell they can screw you hard, so it's best not to buy in the fist place

maybe the coalition have changed this policy since first proposing it in 2017, i don't know, haven't kept up as am not a foreign buyer

but the fact that they propose 1 law in 2017, enact another in 2018?, and keep the right to change it again whenever they like depending on what beneficiaries demand

is so mickey mouse for long term investments like real estate that most foreign buyers simply park their money elsewhere

edit

2017 - The ban on foreign speculators would see only Kiwi citizens and permanent residents able to buy existing homes.
https://www.nzherald.co.nz/business/...ectid=11936182

2018 - Now the ban will allow foreign buyers to hang on to apartments bought off the plan, as long as they are part of a development that is 20 or more units large
Up to 60 per cent of units in new apartment developments of this size could be purchased by foreigners to keep and rent out,
although the Government could set that limit lower in regulations, depending on market conditions.
Those buyers would still not be allowed to occupy the unit themselves, but could rent them out.

National leader Simon Bridges said the ban was "a real case study in bad law-making."
"This bill will have perverse effects, fewer big housing developments, fewer homes, and that's going to be bad for New Zealand."

https://www.stuff.co.nz/national/politics/104826974/foreign-buyers-ban-relaxed-on-apartments-and-for-singapore-nationals

2019 - as predicted, apartment buildings get cancelled, due to lack of interest by by unwanted, but necessary, foreign buyers

[Davo36]

Yeah I actually think there's an exemption you can get (as a developer) as well.

But isn't it funny how everyone was saying they only make up 3% of purchasers but now sales have fallen off a cliff?

[eri]

like the capital gains tax mess

and the kiwi-build mess

when the gov. tells everyone it wants to do 1 thing, but ends up doing the opposite

people just sit on their hands

i mean wtfigo?

https://www.abbreviations.com/WTFIGO

"[International] students couldn't start courses, costing the international education sector $33 million within three to four months."
Additionally, visitors couldn't make their trips in time and some operators had to cancel tours.

https://www.stuff.co.nz/national/the-detail/114288594/the-detail-government-cracking-down-on-visa-requirements-to-ease-cost-of-homes

[Davo36]

Another crap article by Stuff. The headline says:

The Detail: Government cracking down on visa requirements

But the article goes on to say how arrivals are still high and there's more residency permits to process than there was previously.

Processing centre in Mumbai ffs.

They need to actually deliver on their promise I reckon. They aren't doing eff all about it.

[elguapo]

But isn't it funny how everyone was saying they only make up 3% of purchasers but now sales have fallen off a cliff?

House prices are, to a large degree, controlled by future expectations for house prices, and it only takes a small difference between demand and supply to see house prices skyrocket given the supply of houses is so inelastic.
So, it's quite possible that the removal of only a small group of buyers can cause prices to tank. That 3% number may well have been correct across NZ, but it almost certainly was much higher in areas of the Auckland market.

[elguapo]

like the capital gains tax mess

and the kiwi-build mess

when the gov. tells everyone it wants to do 1 thing, but ends up doing the opposite

people just sit on their hands

It is helpful in these situations to understand intent from the actual outcome.

Labour didn't want to, and had no intention of, building 100,000 houses.
Labour was never going to introduce a CGT.

[SwissKiwi]

SwissKiwi, wow, you haven't posted here for years! Welcome back.

Thanks - have been very side tracked doing an arts degree and being in Cuba !


Last time the apartment market crumbled I believe there was only one high end property on the market left flailing - Stanford Residences, which Singaporeans built ontop of the Stanford Plaza. They took years to sell those - kept taking a full page back of the herald property section every weekend. Don't think they dropped the price.

If they're taking a sales hit with China tightening up credit/foreign buyer rules etc, this time the supply is much greater in that luxury market.

I can't help thinking there's a reasonable chance of this turning to custard.

[Davo36]

Thanks - have been very side tracked doing an arts degree and being in Cuba !


Last time the apartment market crumbled I believe there was only one high end property on the market left flailing - Stanford Residences, which Singaporeans built ontop of the Stanford Plaza. They took years to sell those - kept taking a full page back of the herald property section every weekend. Don't think they dropped the price.

If they're taking a sales hit with China tightening up credit/foreign buyer rules etc, this time the supply is much greater in that luxury market.

I can't help thinking there's a reasonable chance of this turning to custard.

Well I've been thinking things are overvalued for about 6 years... House/apartment prices are just crazy. But there you go, they seem to take a pause for a bit then go up again. Go figure.

The RBNZ, government etc. will do everything to avoid a recession.

[SwissKiwi]

Well I've been thinking things are overvalued for about 6 years... House/apartment prices are just crazy.

Right - this v niche segment of the market seems more vulnerable to me. Seascape apartments starting around 1mill with huge BCs are not going to appeal to kiwi investors, or first/second/third home buyers. Perhaps loaded retirees may be interested.
Developers need to sell, they don't want to be landlords - neither do banks!

Have you discontinued your blog or put it on pause?

[Davo36]

Have you discontinued your blog or put it on pause?

I took it down because it was a bit negative and also contained info on ex tenants who hadn't paid etc. One of whom went to jail - so I thought - he's done his time, no point ruining his life.

Got a new little one here: https://duganotherhole.home.blog/. Only a few articles on it.

[chook]

This is the 'traditional ' period in the property cycle where a lot of developers go bankrupt/lose their shirts, happens every time, and yes Swiss Kiwi we will see lots of custard