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Developers move away from Auckland inner city apartments


Developers are shunning Auckland's inner-city apartment market. After putting up around 2000 units last year, worth around $600 million, they are planning only 150 units worth about $45 million next year.

The market spans top-quality million-dollar pads around the Viaduct Harbour to Railway Campus units selling for just $55,000.

New apartment construction is still under way as developers build a further 650 apartments this year. But then demand tails off significantly to just 150 new units.

Robert Holden of Conrad Properties said steep new development contributions proposed by Auckland City had virtually killed the market. He had shelved a 200-unit block due an extra $7 million council charges.

From July 1, Holden said developers would pay $40,000 a unit in development levies where land is $3000/sq m and $80,000 a unit where land was $10,000/sq m as on Queen St. Previously, he was paying only around $6000 in development contributions. 

Units only fetched an average $250,000 each so it was totally uneconomic to build under the new rules, he said. "There will be no supply coming on for at least three years. The developers will go out of business, rents will rise, capital values will rise and the winners will be existing apartment owners," Sydney based Holden said. 

Auckland City has outlawed "shoebox" apartments and ruled studio apartments must be at least 35sq m, one-bedrooms 45sq m and two-bedrooms 70sq m. 

....... and concerns about the quality of blocks with "shoebox" units are just some of the factors which have forced developers to reject Auckland CBD. 

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Source: The New Zealand Herald 26 Feb 2007

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