Plans for the development. Photo / supplied
The developer of a 42-unit $26 million Onehunga apartment project has declared the much-maligned KiwiBuild state scheme a "huge success, all at no cost to the Crown."
Shane Brealey, NZ Living director, said he had already sold 24 of the 25 KiwiBuild units at 340 Onehunga Mall where work is finishing in the popular suburb.
Having more than half his project under the Crown guarantee scheme enabled speed and huge cost savings, gave him the confidence to go ahead and has been such a success that he is now starting a much larger North Shore project.
"It's been built in just nine months and its proves KiwiBuild works," he said of the Onehunga scheme.
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Construction work started last November and finishes next month, said Brealey of the three-level building on the site of three old bungalows.
"So that's got to be some sort of record. It's been only 15 months from buying the land to having all the 42 new homes finished. But it was only nine months from starting building work last November to today having carpets in and kitchens finished and the places ready for people to into during early October once we get through code compliance and new titles being issued."
Buyers had shown an appetite for the places, around 400m from the Onehunga outlet centre.
"The two-bedrooms were just under $600,000 and the one-bedrooms just under $500,000," he said.
The very short timeframe for the project amazed him.
"What KiwiBuild does is enables you to onsell apartments while you're building. That's quite different to most cases. Typically, developers need to achieve a threshold of pre-sales before starting, adding up to 12 months to any project. But KiwiBuild projects can be done by developers in half the time of the usual market-orientated projects," he said.
Even though the Crown guaranteed to buy all 25 of the 42 places, Brealey said he never needed to take advantage fo that and has sold the remaining 17 as free-market units.
"That's eliminated any burden to the Crown," he said.
Shamubeel Eaqub said yesterday KiwiBuild was "no answer" to New Zealand's housing shortage. Opposition housing spokesperson Judith Collins has called the scheme "Kiwifail", the Greens want a rent-to-own scheme and Phil Twyford lost the Housing portfolio to Megan Woods.
In June, the Herald reported that out of the 271 homes offered for sale since KiwiBuild made its first offer to the market in September last year, 158 places were unsold. KiwiBuild places outside Auckland had not sold and were in Christchurch, Wanaka, Te Kauwhata in the Waikato and in the Kotata Heights development in Whangārei.
Brealey acknowledged that this city was popular and demand was high compared to more provincial areas, therefore he said Auckland was appropriate for KiwiBuild.
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The Onehunga scheme was so successful and he has such faith in KiwiBuild that he had now moved to the Shore's Northcote where he plans 102 units on a 7893sq m site where 20 older state homes once stood, he said.
Of the 102 new places on Housing NZ Corporation land, 72 will be KiwiBuild, 30 will be sold on the free market and none will be state houses, although new state houses are being built nearby.
"The kicker is this Thursday, we're using the same formula in Fraser Ave, Northcote where we agreed to buy the land just in June and will finish $69m worth of 102 new homes, within 16 months from start to finish. We plan to finish next October," he said.
Asked why he could sell where other KiwiBuuild homes were unsold, Brealey said: "The old rules of real estate prevail: you've got to be in the right location, have the quality of construction and price must be right.
"That's what 340 Onehunga Mall epitomises. The Crown only provided the under-write so if I couldn't sell the 25 KiwiBuild units, they would then be called on to settle those when they were finished, albeit at a discounted price point. Doing KiwiBuilds enabled us to get started fast. The Crown's happy because they're off the hook. I'm happy as I built them in half the time. It's a win-win situation," he said.
Due to KiwiBuild, units in the project which would have an end value of $69m would be sold for only $62m "a $7m discount due to KiwiBuild, efficiencies and what we've learned."
Brealey says thousands of sites with old stand-alone homes are within a few hundred metres of train stations all across Auckland, so his formula could be repeated to create "tens of thousands of new homes."
Instead, he said the development community had been slow responding and had failed: "The industry has let us down. Developers have been given the opportunity to put forward good quality projects for KiwiBuild to consider and support but not enough are coming forward and offering projects."
One of the keys to his success, he said, was working with the same subcontractors on each job: Design Windows, Auckland Brick and Block, Nelson Stud, DNA Electrical, Illingworth Plumbing, Counties Kitchens and Lovich Floors.
So instead of selling an apartment for the highest price possible and engaging contractors at the lowest price, his scheme worked in an entirely different way: lower prices were sought for units and contractors who were often owner-operators were getting a steady stream of work so each party was able to trust the other and work together, he said.
The store is one of the most profitable and popular in Foodstuffs' North Island co-op.