Summerset Group's plans for a new $300m Parnell village. Photo / supplied
Summerset Group's plans for a new $300m Parnell village. Photo / supplied
Falling house prices and rising building costs have prompted a $2 billion developer to stall plans for a controversial new eight-building $300 million high-rise Auckland retirement village.
Scott Scoullar, chief executive of Summerset Group with a $2 billion market capitalisation and $5.4b in assets, said plans to build the schemeannounced two years ago were delayed due to changing circumstances.
“Following a new construction cost estimate for the Parnell village, we have decided to put it on hold while we undertake a review,” he said.
“Construction cost pressures coinciding with a declining property market make for a relatively complex project. We consider it prudent to just pause in this environment while we do the review,” Scoullar said.
Retirement village stocks have been hammered on the NZX lately.
Yesterday, Ryman Healthcare hit a nine-year low, down a further 17c or 2.93 per cent to $5.63. A price that low was last seen in 2013, before the company moved steadily ahead to a peak of $15.80 in September last year.
The company just keeps being sold off, with people talking up a possible capital raise to repay interest-bearing debt, the Herald reported yesterday.
Some institutional investors say now is the best time to buy retirement village shares because they are trading so low.
“I only get this chance once every 10 years,” said one major investor of Ryman.
In July 2015, Summerset bought a 2.3ha site next to the Auckland Domain and in September 2020, it applied to Auckland Council for resource consent to build up to eight levels, planning two and three-bedroom apartments, a rest home, hospital-level care, memory care and short-term and respite care.
Work was planned at 23 and 41 Cheshire St and road reserves on Ngahere Tce and Cheshire St, as well as on railway land.
Summerset Villages (Parnell) planned eight interconnected buildings of three to eight storeys in height, bringing 316 new units in independent living and aged care units, common amenities and facilities, 235 parking spaces and associated works.
The proposal included works within the western end of Ngahere Tce road reserve, the southern end of the Cheshire St cul-de-sac and a small section of railway land, to improve integration with the proposal, provide for utilities, and incorporate landscaping.
Overall, consent was required as a restricted discretionary activity.
Scott Scoullar, Summerset's chief executive. Photo / supplied
But the scheme caused an outcry in the area.
Two years ago, former local resident and Gibraltar Owners Group member Graham Roberts was one of many to express concern.
“There will be no buffer from the new construction because Summerset has already taken down all trees,” he said at the time.
He also said glass towers would clash with the Parnell Village blend-in style, and raised concerns about losing public car parks and access to a train platform.
He said today he’d since left the area but remains connected to his former neighbours.
“About 18 months ago, with all that stuff that was going on, we moved to Waiheke,” he said today.
He noticed the carpark had been upgraded. “So I thought, this project can’t be imminent. They’ve laid new stones across it and it looks quite tidy compared to how it looked before,” Roberts said.
Another view of the retirement village proposed by Summerset Group for Parnell. Photo / supplied
The Parnell Business Association said yesterday it had been advised by Summerset.
During the past few months, the company had been working on progressing its retirement village project next to the Parnell railway station.
Summerset said “current market conditions, particularly rising construction costs during the 2022 year and the falling property market, have taken their toll and the current scheme is no longer considered viable in the current market”.
For this relatively complex project, Summerset considered it prudent to pause in the current market environment, the association said.
This is the only Summerset project impacted. There are no plans to put other Summerset projects on hold.
The site was now being used by Auckland Transport and a contractor to progress the pedestrian underpass project at the nearby Parnell railway station. No decisions about future land ownership had been made.
Cheryl Adamson, Parnell Business Association general manager, submitted for and against the scheme.
She said benefits would be around 500 more residents in the area but a big drawback was the six to seven years of construction in the tight street environment.
Construction traffic, noise and vibration were other issues, she said.
But she also cited advantages.
“We are in support of urban densification in the city fringe areas, and while the development is over the height restrictions on certain buildings, we believe it is appropriate in the context of buildings on adjacent land which have been granted 27m.
“We believe this is an appropriate use of the site and the negative impact is fairly localised, but it is nevertheless considerable.”
Adamson said today: “We’re kind of sad it’s been put on hold but we are relieved due to the impact the traffic would have had for residents in Cheshire St.”
Summerset is trading down 30 per cent annually around $9.
