Lion site 'Newmarket's Soho Square'

Lion Nathan is buying back its historic site via a joint venture called Great Northern Developments. Photo / Brett Phibbs

AMP Capital Investors' move on Newmarket's Lion Nathan site at the property boom peak and the decision to quit in a recession has left one broker comparing it to Ponsonby's Soho Square site.

Bruce Whillans, principal of Ray White Commercial, said both projects were hatched at the peak of the boom but were now non-income-producing land deals hunting for buyers in a recessionary market. Yet both sites would eventually be developed and would lend themselves to large retail and residential builds.

AMP struck a $162 million deal struck in 2007, paying a $50 million deposit and working on a $1 billion master-planned community, subject to planning approval.

But on Thursday, Lion said it would buy the site back via Great Northern Developments, a joint venture owned by AMP Private Equity Real Estate Fund II, an AMP Capital Investors-managed fund, and Haumi Development Partnership.

AMP said the prolonged financial crisis had a dramatic effect on the economics and value of development land and blocks such as the Khyber Pass site.

Whillans, who has sold commercial property worth more than $1 billion in the past 25 years, said vacant commercial land values had fallen 30 per cent since the peak of the boom but the Newmarket land would not have suffered quite that severely.

"In some areas, it's worse, like bare residential land at Coopers Beach which has dropped more like 60 per cent," he said. "The Great Northern site at 5.2ha is around the same size as Albert Park but it's less affected by those value drops because it's strategically positioned. It's not unlike Soho."

Although the Newmarket site was probably still worth "north of $100 million", it would not be worth anywhere near 2007's $162 million, he said.

Behind-the-scenes work on the Newmarket site meant the project had not been idle for the last three years. AMP wanted to put forward a private plan change and in February, Conor Collier of AMP Capital Investors said plans for the site were not yet finished but he hoped an application would be lodged with the council soon.

"We are continuing with business-as-usual activities to develop the site and now expect to lodge the private plan change application to rezone the site around April. This is progressing on a longer time frame than originally planned, which we believe is prudent given current market conditions," Collier said.

Yesterday, an AMP spokeswoman said the plan change application was never made.

"In terms of settlement, it was due when Lion exited the site. When it became clear that it would not be be possible to secure the funding required to develop the site, a process was commenced with Lion to agree the terms on which the site would be returned," she said.

AMP wanted to re-zone the industrial and commercial site for apartments, a retirement village, shops, carparks and offices.

Whillans said all this planning work could now win big rewards for Lion which might not develop the land but sell it.

One purchaser is examining buying Soho, Whillans said.

"There's no deal on it yet and it's like all these big properties: it's not an easy time. Vacant land is not an easy one to back and you have to have a clear direction to get banking support. Soho will be sold as one property.