Auckland apartment buildings, which would have added 2044 units to the city's residential supply, have been shelved in the last four years but it doesn't mean places won't be built on those sites, a new report says.
Zoltan Moricz and Tamba Carleton, in the Auckland office of CBRE Research New Zealand, have released the report Apartment launches and abandonments examining the apartment supply pipeline.
"Thirty one projects totalling 2044 units have been abandoned over the past four years. This equates to 15 and 16 per cent respectively of the total number of projects and apartments launched," their research just released said.
Places would be built on a number of the sites where a project has been shelved.
"Abandonment refers to a specific active pipeline project being abandoned.
It does not mean that development plans for the site of this project are completely abandoned. Indeed, a number of the abandoned projects (nearly a third according to our records) have subsequently been relaunched as another project on the same site, while several other sites on which projects were abandoned have been recently transacted to a different developer," the document said.
The study also stressed the large number of projects which are going ahead.
"While abandonments are a major current market focus, developers continue to launch new projects. So far in 2016, 45 apartment projects comprising 2600 units have been launched. These launches are spread throughout Auckland and include CBD, fringe, and suburban locations. During this period four projects have been abandoned," the study said.
Prime Minister John Key says first-home buyers should consider apartments : "I think apartments are a very credible alternative for people to buy. For a whole variety of reasons - everything from convenience to affordability," Key said recently.
Last month, Key said: "I tell you where their first house is - it's an apartment ... that is the reality of a first home for a young couple in Australia."
Pete Evans, Colliers's residential project marketing national director, said last week that 35 Auckland apartment projects had been cancelled in the last year. Colliers had been marketing the planned Flo apartment project in Avondale where 91 units were due to be built. But developer Jon Sandler wrote to buyers, saying the project would not proceed.
He blamed rising construction costs - up 20 per cent in only a year - and problems securing bank finance.
The CBRE report questioned whether that was a major contributor.
"A recent focus has been on construction costs and financing as major contributing factors. While these play an important role in the abandonment of some projects, other factors have also been significant contributors to projects being abandoned. These factors include intrinsic project specific attributes boiling down to developers launching the wrong project, at the wrong place, at the wrong price," the CBRE report said.
"Some project abandonments might have been down to developer skill and experience. While construction costs and financing are contributing factors which have gained increasing focus this year, they are two of a suite of reasons behind abandonment," the CBRE report said.
Read full CBRE apartment report