- Colliers agents Shoneet Chand and Josh Coburn are listing The Loxley, a 46-apartment block in Takapuna.
- The development has attracted interest from overseas funds, particularly in the build-to-rent market.
- Colliers' Alain McKinney highlighted the need for tax law changes to boost the build-to-rent sector.
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That's the question Colliers agents Shoneet Chand and Josh Coburn are trying to answer. They are the listing agents for The Loxley, a new-build apartment block in Auckland's Takapuna.
Coburn, Colliers' director of site sales and capital markets, said the 46 completed apartments have attracted a lot of interest from overseas funds looking to invest in the build-to-rent market.
The five-storey development at 32-34 Tennyson Avenue boasts 43 car parks, storage lockers and panoramic views, and is close to Takapuna’s shops, beach and public transport links.
The 46 apartments in the block are completed and vacant. Photo / Supplied
The New Zealand Herald reported in June that WFT Finance – a company linked to Tauranga’s wealthy Wright family – seized possession of the project last month after the owners, Tennyson GCO, went into liquidation.
Coburn declined to say where The Loxley lands price-wise, but OneRoof understands the project could be worth up to $60 million.
“Tennyson Avenue has received tremendous interest, including a large volume of enquiries from BTR [build to rent] operators,” he said, noting that many of the funds involved in the market invest upwards of $100m.
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“It is a rare opportunity to bid on a fully completed and fully vacant facility at a price that works for them, without carrying the development and construction risks that normally accompany the endeavour,” he said, adding that BTR operators were also competing with traditional investors and developers.
Colliers national director of strategic advisory Alain McKinney told OneRoof that the recent changes to the overseas investment rules had raised New Zealand's profile.
However, he could not say if any funds had made purchases under the Golden Visa, citing confidentiality. “It’s a good piece of legislation that opened the door for us,” he said.
He said of the BTR sector: “Think of it as a commercial lease for residential property, renting out the whole building and managing it that way. It is very close to a hotel, with a huge amount of amenities.” Owners like that tenants are long-term.
The five storey apartment blocks are near the amenities and public transport hubs that long term renters look for. Photo / Supplied
However, scale is still an issue in the New Zealand market. Despite nearly 2000 finished BTR units in the country, 1600 of them in Auckland, and another 3500 in the pipeline, many do not have the minimum of 100 units most investors sought, McKinney said. Large-scale operators like Kiwi Property’s Residio, Simplicity Living and New Ground Investments were the exception.
“People from capital markets like Singapore or Australia, they are looking for liquidity and a rate of return, to diversify [into residential] from an office fund or industrial. They look at tenants with one-year leases and occupancy rates of 95%.”
McKinney said that in more mature BTR markets like the UK and US, the typical project had a slightly smaller apartment supplemented by a raft of quality amenities such as shared entertaining, dining, and kitchen spaces, rooftop or barbecue areas, a gym, and some sort of co-working space.
He noted that while BTR investments were long-term, owners can sell them when the market goes up, although the sector was not at that point in New Zealand.
McKinney said that the next step in growing the build-to-rent sector was to change the tax laws on how these assets were treated for GST and depreciation. Currently, they were treated the same as residential investments, not commercial ones, which made them a tough sell.
“It would certainly help stimulate the market with a little bit more margin. The Property Council is hitting this very hard," he said.
“You want it to be a success because it offers more private development, and we generally move faster than public development.
“People being able to rent with security of tenure, that’s a really good product.”
- 32–34 Tennyson Avenue, Takapuna, Auckland, is for sale, deadline closing July 10
