Two Auckland housing complexes owned by an entity associated with Du Val Group are for sale via CBRE, offering investors a rare entry point into the sought-after living sector.
CBRE, acting for the government-appointed statutory manager of various entities associated with the Du Val Group, is marketing the Du Val Build to Rent Portfolio for sale by tender, closing on Thursday 13 March 2025 (will not be sold prior).
The properties, at 69 McKenzie Road, Mangere Bridge and 2-6 May Road, Mangere East, are offered for sale either together as a portfolio, or individually as two separate assets.
Natasha Sarkar, director of structured transactions and advisory at CBRE, said the assets provide a substantial opportunity to invest in the coveted residential living sector.
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“Both these properties are diversified investment opportunities of notable scale, as well as being proven operational assets.”
The properties were both purpose built as rental accommodation and consist of 72 and 99 modern studio units respectively. They are situated in established residential suburbs close to employment hubs, amenities and transport links.
69 McKenzie Road, Mangere Bridge, provides 72 studio units across eight separately titled apartment blocks, with 63 car parks.
The units, which are currently leased privately, will progressively transition to a new 10-year lease to The Whanau Ora Community Clinic, which will eventually take over full occupancy of the property.
Upon full occupancy by Whanau Ora, the property will generate approximately $1.190m in net annual rental income. The lease to Whanau Ora also includes provisions for fixed rental increases in addition to market rent reviews subject to a hard ratchet.
2-6 May Road in Mangere East has 99 studio units across 11 separately titled apartment blocks, with 42 carparks.
36 of the units are currently leased to a registered community housing provider, Home In Place, with the balance of units available as private rentals.
Currently, May Road is returning around $1.33m in net annual income, with 93% occupancy. Longer term, the potential exists to explore headlease opportunities with groups such as Whanau Ora.
Brad Ross, senior negotiator of capital markets at CBRE, said the appeal of the two properties should be significant, given the defensive and stable nature of the asset class coupled with its Auckland positioning.
“The living and build to rent sectors are countercyclical to the performance of the wider economy, founded on the essential and non-discretionary nature of housing.
"These assets provide a secure income stream with low volatility which is highly desirable to commercial property investors seeking diversification,” he said.
Further, the assets provide opportunities for both passive and active investors; with McKenzie Road a passive offering subject to a new 10 year lease to a single tenant who assumes management of all units, while May Road offers active asset management potential.
“Given the nature of the offerings, we expect strong and wide interest in the assets,” says Ross.
The residential living sector’s strong fundamentals are a key driver of investor demand, said John Holmes, CBRE senior director of capital markets.
“Demographic trends and housing affordability challenges are driving increasing demand for rental properties of this nature. Opportunities for investors to enter the Auckland residential living sector at scale are seldom available, which is likely to make these assets highly sought after.”
Build to rent typically involves multi-unit residential developments held under single ownership for long-term rental, which is an emerging model in New Zealand but well established in overseas markets such as the US and the UK, and is rapidly taking prominence across Australia, said Sarkar.
Auckland’s population has increased by 23% since 2010 and the city continues to attract new migrants, who tend to require rental accommodation as a start. Currently, 41% of Auckland households are renting, significantly higher than the national average of 34%.
Community and social housing needs further bolster the investment case for build to rent properties. There is an undersupply of one bedroom social accommodation, with 51% of the Auckland-based applicants on New Zealand’s housing register requiring one-bedroom accommodation, which aligns with the Du Val portfolio’s studio layout.
- Supplied by CBRE
