Property Insider: Kāinga Ora under fire; Chinese apartment developers ‘shrivel’; why mega-projects are late and expensive; 442 new Auckland hotel rooms opening from today
Former Prime Minister Bill English is heading a review of state-owned social housing landlord Kāinga Ora. Photo / Mark Mitchell
Former Prime Minister Bill English is heading a review of state-owned social housing landlord Kāinga Ora. Photo / Mark Mitchell
The Crown’s state housing agency could be in for a big shake-up, Chinese developers have shrivelled from Australasia, why mega-projects are usually late and cost more and 442 new Auckland hotel rooms opening from today till March - all this in today’s Property Insider.
Kāinga Ora is under fire, withNew Zealand’s biggest landlord being probed after a Government announcement of an investigation involving debts and financing.
An independent review headed by former Prime Minister Sir Bill English is due to report to Finance Minister Nicola Willis and Housing Minister Chris Bishop by March.
Cutting debt could be a big focus for the agency managing 72,000 homes, most of which it owns. The review should identify ways to improve Kāinga Ora performance and value for money and to manage its impact on debt and operating balance before gains and losses (OBEGAL).
The terms of the review note that Kāinga Ora “is a large Crown entity with annual expenditure of $2.5 billion and total assets of $45b which have a significant impact on the Government financial statements in terms of OBEGAL and impact net debt by $13.2b over the forecast period”.
The review should identify ways to improve its performance, provide value for money and to manage its impacts on debt.
On January 18, Bishopreleased a letter to Kāinga Ora board chairman and former Labour minister Vui Mark Gosche after a response to an Official Information Act request seen by his office which showed 3906 public homes, 5 per cent of public housing stock, were vacant as of October 31.
Next, it was reported that a Whanganui state house tenant abandoned her place last February, a relative was living there rent-free but it wasn’t until last month that the Crown entity got a ruling terminating her tenancy, for which she must pay $13,300 back rent.
A record rise in unpaid rent has blighted KO’s books and it’s up by 813 per cent on 2019. The rent arrears bill rocketed from $2.3 million in 2021 to $21m by December. One man in Upper Hutt owes $48,000, offering $150/week to repay that.
Chinese developers ‘shrivel up’ in Australia, New Zealand
The South China Morning Post reported on January 20 that many Chinese developers here and in Australia had closed or scaled-back residential development because of a property crisis in China, weak demand and higher construction costs. The headline described the retreat as a “shrivel up”.
Chinese property development in Australasia soared around 2013 at the height of China’s “go out” policy that prompted Chinese firms and citizens to seek overseas investments, the Post reported.
“The Chinese developer boom that kicked off in the Australian and New Zealand housing markets a decade ago has ended,” the Post said.
The Post named Risland as one of the larger ones working in New Zealand.
The Seascape residential tower is being built by China Construction on Customs St East. Photo / Jason Oxenham
Sunny is part of the larger Risland, owned by Hong Kong Stock Exchange-listed Country Garden Holdings.
China Construction got to level 50 of New Zealand’s tallest new apartment tower, Seascape in Auckland CBD by last September. Shundi Customs is the developer of that $300m project , which is to be 56 levels and 187m tall.
The Post asked if the Chinese developers were hibernating away from Australasia, waiting for better times. Perhaps stronger economies and a fall in interest rates might see them return.
James Law of Auckland’s James Law Realty confirmed many Chinese residential developers here were retreating.
“It’s pretty apparent. There’s quite a lot of them sitting on sites, some under construction, close to completion or unfinished,” Law said.
Mega-projects: 0.2 per cent on time and budget globally
Infrastructure New Zealand’s new policy paper on mega-projects puts delays and cost rises in perspective.
Megaprojects are challenging to deliver globally and test governments internationally. They incur a higher risk of cost overruns, delays and failure to deliver the desired benefits. A survey of more than 3000 projects worldwide found only 27 per cent were delivered on budget, 3 per cent on budget and time and only 0.2 per cent on budget, time and quality parameters, the policy paper says.
Drone footage of Auckland’s newest railway line has been revealed, showing the first of the two underground 3.45km-long tracks. Photo / City Rail Link
Martina Moroney, advocacy and strategy lead for Infrastructure NZ, said the figures came from Oxford University researcher Brent Flyvbjerg in a book he wrote with Dan Gardner. Flyvbjerg also wrote an opinion piece titled Why megaprojects systemically fail - and what can be done about it?
In other somewhat depressing news, research from the New Zealand Infrastructure Commission Te Waihanga found New Zealand is one of the least efficient countries at delivering infrastructure and optimising the return on our investment.
So don’t be surprised about delays and cost rises from the City Rail Link.
Lights, cameras - hotel guests!
Hotel levels are lower and office levels are higher at One Queen, which is the Deloitte Centre. Photo / Dean Purcell
Auckland gets two huge new hotels in the next few weeks, adding 442 new rooms into the city’s hotel stock.
The new InterContinental Auckland will be first, opening today in the 21-level ex-HSBC building which is now the Deloitte Centre or One Queen on Quay St, owned by Precinct Properties and where a $310m renovation is being completed.
The waterfront hotel with a rooftop bar and restaurant has 139 guest rooms each with a woven harakeke (flax) art honouring atua (God). On level six, for example, it’s all Papatūānuku - the earth mother. Rooms are from levels six to 11 in 8827sq m. The presidential suite is 120sq m.
SkyCity Entertainment said last year it was due to open its new Horizon Hotel on March 1, saying the business would become the largest single-site accommodation provider in New Zealand, with 938 rooms across three hotels in Auckland: SkyCity Hotel, The Grand by SkyCity and Horizon Hotel with 303 rooms, including 10 suites.
But Property Insider now understands that March 1 might not be the opening date but the business still plans to open it in March.
Meantime, SkyCity has been bringing in people to try out rooms, a sort of “soft” opening. That’s standard industry practice, a spokesman said. Property Insider asked about that but the spokesman said questions had been met with hilarity from his side, such was the pedestrian nature of the hotel bed testers - and our inquiry.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
