Rising construction costs and problems getting funding has resulted in cancellation of a multimillion dollar west Auckland apartment project on land declared a Special Housing Area.
Buyer Andrea Warmington said she was left "devastated" after being told by Colliers International that development of the Flo Apartments in Avondale would not proceed.
"You will have received advice from The Subsume Trust (Mike Roberton - solicitor), the vendor of FLO Apartments, Rosebank Road, Avondale, advising that, due to unforeseen problems in securing development funding and rising construction costs, the vendor is unable to confirm satisfaction of Clause 20.1 of the sale and purchase agreement," said the letter from Colliers's residential project marketing national director Pete Evans.
"This notice means that the contract and your purchase of an apartment at FLO Apartments will not proceed," Evans said.
Flo units were earlier this year selling from $375,000 and cars to be stacked on top of each other to save space, the Herald reported in February.
As Auckland moves towards intensifying land development to meet strong demand, Flo offered 91 units beside the site of the Avondale RSA at the corner of Rosebank Rd and Layard St.
Developer Jon Sandler said at the time that places would be affordable, starting from $375,000 and ranging up to more than $700,000, all on land declared a Special Housing Area.
Ten per cent of the units must be considered affordable to meet the SHA requirements.
I am devastated by this news and my confidence in buying an apartment off the plans has been badly shaken.
The apartment block is designed by Young & Richards.
Warmington said she was a first home buyer.
"This weekend, I found out this development will no longer be proceeding 'due to unforeseen problems in securing development funding and rising construction costs'.
"I am devastated by this news and my confidence in buying an apartment off the plans has been badly shaken," she said.
Evans' letter told more about the cancellation.
"Colliers has made significant efforts to assist the vendor in finding ways to get the development to proceed but, unfortunately, these efforts have not been successful. We are currently processing the return of your deposit with the accumulated interest, net of withholding tax and bank fees, to your nominated bank account in the next few days.
"I am sure that you will be, as we are, disappointed that the FLO development will not proceed. Replacing your FLO opportunity is possible. Colliers is working with proven developers on a number of projects which we believe offer the best opportunities, for your budget, in the market today. Due to your circumstances we are offering you the first opportunity to consider these projects before the general public," Evans said.
Gary Groves of Sanctuary Group today announced a record $15.3 million purchase price for a penthouse in The International at 9 Princes St. Building work to convert the ex-Fonterra headquarters into apartments is due to start at the end of next month.
"I know of the project," Groves said of Flo. "High construction costs are a major issue for projects which is why a number are not proceeding because the developers sold them for a particular value. Then they go to the construction company and they can't make it work because there's not margin."
Evans told buyers that staff would be in touch "to assist you, if we can, with any other opportunity which may be of interest.
"You may not be ready to look at new opportunities but if you would like to be aware of new developments that are coming to the market through Colliers you can register to be "First to Know" by going online," Evans said.
Catherine Farmer, chairperson of the Whau Local Board in February, said Flo was well-designed and would add "to the anticipated regeneration of Avondale and provide housing with easy reach of the wonderful west coast beaches and the central city."