The prospect of a powerful new Auckland urban development authority has been welcomed by a real estate industry leader.

Prime Minister John Key had referred to the new agency overseeing major Auckland building projects, when he spoke to the Chinese Chamber of Commerce.

"At this stage, that thinking is in its infancy but we're continuing to look at what the options may be," Key said.

Last year, the Productivity Commission said such a new authority could assemble sites, master-plan large residential developments and partner with private sector groups to deliver them.


Connal Townsend, Property Council chief executive, said his organisation had suggested that authority around 2013 and he was now delighted to see that picked up.

"We're advocates of this as a mechanism," Townsend said.

"The benefits are that a government agency is able to borrow at a better rate than the private sector and the size of its balance sheet means it can leverage more.

"We've always seen a real benefit in master planning. The new authority can agglomerate or pull together footprints of land to get developments under way, and get through the tangled web of multiple ownership and put in roads, water, broadband and electricity."

However, Eric Crampton, NZ Initiative research chief, had reservations.

"It's good that the Government is looking for solutions to Auckland's housing problems. But an Auckland urban development authority that could threaten compulsory acquisition is a step too far," Crampton said.

"The American experience has been particularly worrying. There, local council officials wanting to encourage new business and new development have been very quick to use eminent domain to take peoples' houses and give them to private developers.

"New Zealand has not really gone down that road, as takings under the Public Works Act have tended to be for public works like transport corridors or public infrastructure rather than for private profit.

"The better solution is surely to ease zoning and overlays rather than turn to compulsory acquisition."

Key also raised the prospect of Chinese companies funding and building infrastructure to speed up Auckland development - which Hawkins Group managing director David McConnell supported.

"We're already in a joint venture with China State Construction on St James," McConnell said.

He said Hawkins was also bidding to build the new $200 million Park Hyatt on the waterfront with China State Construction.

"Chinese construction companies are no different to Japanese construction companies in the 80s and 90s - they all have a role to play."