When offshore investment meets Kiwi needs
Date: 18 March 2015
First-home buyers and property investors are jumping at a new residential offering in the fast-growing Auckland suburb of Albany, in a project that is designed by Kiwis, but funded from offshore.
The Library Lane project, due for completion at the end of 2017, has sold nearly 75% of the 130 first-phase units based on the plans, and the second and final phase of approximately 170 apartments will go on the market in mid-2015. The first group of apartments, a portion of which will be fully furnished by the developer and designer, will be completed and ready for occupation by the end of 2016. The market is setting the value, with an average sale price to date of $440,000.
The design is being led by the Auckland-based firm Brown Day Group Architects, which has a more than 40-year history in urban design, architecture, planning and landscape design. The structural work is being completed by civil, structural and mechanical engineering firm Spiire New Zealand. Interior design is being led by Lovelace & Co. Funding of the development comes from a combination of China- and New Zealand-based investors within North Harbour Developments, the parent company of Library Lane Developments.
In a reflection of the urgent need for quality residential housing in Auckland, resource consent for the Library Lane project was granted in just eight months, following the conception of the project in late 2013. The land area of 1.6 ha was purchased for $14 million and is approved for high-density residential development under the current Auckland Council plan. The first phase of construction will cost around $40 million, with approximately $55 million earmarked for the second phase.
The ground floor of the building has resource consent for mixed use and will be occupied by light commercial and office-based tenants. Eateries are not permitted, ruling out potential venting or odour problems for residential occupants of the floors above.
Those who have bought so far are a mix of investors, students, young couples buying their first home, and empty-nesters and retirees downsizing from larger homes on the North Shore. The location is ideal for those who want to buy or invest in apartment property and be based on this side of the Harbour Bridge. The site offers easy motorway access both north and south, and for commuters there is a nearby park-and-ride with a dedicated bus lane to the CBD.
A FORCE IN PROPERTY DEVELOPMENT
“It is no secret that there is an extreme shortage of new, high-quality residential property in Auckland at present, and we are pleased that by the time Library Lane is completed in three years’ time, we will have added around 300 new apartments to the stock, and created more opportunity for buyers in a competitive market,” says Library Lane Developments director Sky Cai.
“That the design and construction is being done by experienced New Zealand firms with excellent track records should give the new owners and all prospective buyers confidence that they are buying and investing wisely, with an eye to the future.”
Mr Cai has become something of a force in property development since he immigrated to New Zealand from China in 2001, aged 17. His first property projects were four small subdivisions in the Torbay, Takapuna and Albany areas. In addition to Library Lane, he is now working on a Birkenhead development of 27 stand-alone houses, and a project to build 20 terraced houses and 115 apartments near the intersection of Upper Harbour and Albany Highways. Mr Cai is a shareholder in Chancellor Construction, a fast-growing three-year-old business that has established a reputation for high quality and strict control of project timing.
Mr Cai says the various projects exemplify what is possible when offshore investment is channelled to meet a New Zealand need. “I came to New Zealand quite young, and it was immediately clear to me what opportunities existed in the export sector, where I started, and the property sector, which I’m heavily involved in now,” he comments.
“What I’ve learned from hands-on development is that the local property market – especially Auckland, which is suffering such a stock shortage – can benefit from a truly targeted, intelligent approach to foreign investment. We now have a great advantage in New Zealand of second- and third-generation Chinese people who are fully immersed in the market and lifestyle and can take opportunities to China-based funders.“
THE STIGMA OF FOREIGN INVESTMENT
Mr Cai says one of the important elements for buyers of offshore-funded local property is the quality of the build and finish. “It’s the Kiwi-Chinese, like me, who can liaise between New Zealand engineering and construction firms and Chinese funders to make this proposition work,” he adds.
“I do believe that as evidence mounts of the value of these partnerships, the stigma of foreign investment is falling away. People realise that if we want good new residential property coming on stream in a reasonable timeframe, we can’t rely purely on local funding.”
Mr Cai says non-Chinese Kiwis who are thinking of working with an offshore-based partner or entity should consider hiring a ‘cultural translator’ as an intermediary. “Companies or entrepreneurs that are fundamentally Kiwi and interested in the Chinese market will need someone who can help them bridge the gap between New Zealand and China,” he notes.
“The gap is often more about subtle cultural differences than language or economic barriers. It can be overcome quite easily with the right guidance, understanding of the different approaches to business, regulatory issues for different industries, and so on.”
Having now spent nearly half his life in New Zealand, Mr Cai says he feels confident working directly with stakeholders in both markets, but points to long-time colleague Pauline Gao, the director of the Auckland-based specialist marketing firm MultiMarketing, as an example of a cultural translator and ambassador who divides her time between New Zealand and China, and fosters business connections between the two markets, particularly in the property development, construction and digital sectors.
SOLID STEEL AND CONCRETE
The Library Lane apartments are close to the large Westfield Albany shopping centre, the bars and eateries of Albany village, the QBE North Harbour Stadium, a weekend farmers’ market, and world-class education facilities, including top primary and secondary schools and the Albany campus of Massey University.
Stage one of the development went on the market in mid-2014, and an onsite showroom is open daily. More than 90 of the 130 apartments available in the first phase have already been sold.
The apartments will be constructed from solid steel and concrete, with high-quality durable cladding and insulation that provides superior acoustic privacy. Features include double-glazed glass and LED lighting, secure covered parking, and 24-hour onsite management and security. A large central courtyard designed to capture the sun will be accompanied by fully landscaped grounds.
The full project is expected to be completed by the end of 2017.
-NZ Construction News