North Shore residents leaving homes for $1.2m-$3m apartments at Omana North

Omana North, planned to rise in the mall carpark. Photo / NZRPG

North Shore residents are leaving older homes for $1.2 million to $3 million apartments rising in a new nine-level 63-unit $100m project at Milford.

Campbell Barbour, NZ Retail Property Group general manager, said units were pre-selling in the under-construction Omana North project in part of a former carpark at the shopping centre the company owns.

"They started at $1.2m - although I don't know if we've got any of those left - and went up to the penthouses which are $4m-plus. The highest price achieved so far is $3m. A good number of places have already sold," he said.

The building contract was let to an NZRPG related business S & G Construction. The first floor has been poured and steel work is up to the third level, he said.

"The people buying are all locals," Barbour said.

House prices in the area were about double what NZRPG was asking, so he said locals could afford the units. Most buyers were in the middle to older age brackets and often planned to sell more traditional-style family homes.

Barfoot & Thompson will release its December sales data tomorrow. Economists are forecasting prices this year to rise by as much as 16 per cent in the first half.

National house prices could rise by as much as 13 to 16 per cent in the next few months.
Economists at Westpac, ASB, BNZ and Kiwibank say low interest rates and high demand will continue to have an impact in the new year.

The construction site's location in the centre of Milford. Photo / NZRPG

These predictions come despite the Reserve Bank's scheduled introduction of tougher lending rules for investors in March.

Westpac chief economist Dominick Stephens said house price inflation had a way to run yet and he's picking big growth this year.

"We are forecasting a peak of 16 per cent annual house price inflation in June 2021, and a full-year increase over 2021 of 12.2 per cent," he said.

"House prices are being driven higher by low interest rates, and interest rates are set to stay low or fall further over the coming year. Meanwhile, other factors such as net migration and the economy are going to improve. So our models point to ongoing rapid house price increases."

Barbour said building work at Omana North started early last year and the business has a display suite near The Warehouse entrance inside the mall.

Four years ago, the display suite for The Milford was at the opposite end of the same mall. But no apartments rose in that scheme and Barbour said today Omana North was an entirely new project.

In 2017, NZRPG said high bank borrowing costs, falling house prices, low pre-sales and delays getting contract building prices prompted it to stall its $200 million The Milford apartment/shopping project.

Sara Johnson, NZRPG marketing and communications general manager, said a in 2017 that a combination of factors prompted the business to delay work building the 115-unit apartments and 20 new shops.

The business would not begin work at the site then and had repaid all deposits on apartments but would review the situation around March.

"In terms of the traditional channels of the Australian-based banks, there was a lot more discussions about borrowing the money than there would have been a couple of years ago," Johnson said at the time of NZRPG's trouble funding the big project.

It's not to say they were not going to lend. But was it the best thing for the business? Not necessarily. Interest rates were higher," Johnson said four years ago.

Plans for an interior at Omana North. Photo / NZRPG

"There's nervousness in terms of the real estate market," she said, revealing that deposits were only taken on 18 of the 115 units, amounting to sales of $50m of property, including the $6m penthouse.

Trouble getting prices from many different trades compounded the situation.

"We also had delays with the guaranteed maximum price contract with all the construction businesses. It's a big development. It was getting that fixed pricing over a period of time. As all the pricing came in, we were getting closer and closer to Christmas and we would have been starting early September, then October.

Campbell Barbour of NZ Retail Property Group. Photo / Michael Craig

"And actually we are a retail centre owner first and foremost, so we will focus on the retail during the Christmas period and take another look at the project in March next year," she said in 2017.

Today, Barbour said conditions had changed significantly since 2017. Apartment projects were linked closely to the residential market and when one boomed, so did the other, he said.

"There's a calibration between the residential market and these projects. The people shifting are usually coming out of something," he said referring to buyers who had been home owners for many years.

Since 2017, NZRPG sold its big Highbury shopping centre on the North Shore.

Construction of Omana North was scheduled to be finished later this year but Barbour said Covid and the five-week lockdown from March last year had delayed the project.

"The target is the end of this year but obviously there was a programme change around Covid," he said today.

Plans show six penthouses on level four. Unit 904 is the largest at 147sq m and is selling with two bedrooms, three bathrooms and one basement car park.