Super cheap Auckland apartments, priced from $375,000, are selling out fast in a new scheme launched by one of New Zealand's most experienced builders.
Shane Brealey, who founded and then sold commercial builder NZ Strong, is working with partner Martin Cooper on plans to develop the three-level 82-unit $48 million Mason Square in Otahuhu.
The Mason Ave site off Station Rd is beside the new Toia Recreation Centre, built by NZ Strong, and the Holy Trinity Church. Brealey said the land was bought from the church.
Nine studio apartments of around 38sq m were marketed from $375,000, then all pre-sold. All seven one-bedroom units of around 70sq m were also pre-sold for $440,000, Brealey said.
Two-bedroom units of 75sq m to 83sq m are being marketed from $565,000 to $640,000, Brealey said.
Flo Apartments planned for Avondale started from $375,000 but that project on a Special Housing Area was cancelled last year due to funding and construction costs.
Brealey said the Otahuhu project was not a Special Housing Area, but would be built and costs had been kept down deliberately.
"The key to being able to offer relatively affordable apartments- 82 apartments at under $650,000 being the supposed affordable threshold- is working from the bottom up rather than top down: get an attractive masterplan, understand the construction implications and target every line item of cost. Then add appropriate contingencies for the unknown and a margin that the banks will support to arrive at a price list that everything works at.
"The top-down approach starts with what you think you can sell apartments for by looking at market comparable sales and charge as much as you can. We are about $100,000 to $125,000 better priced than comparable projects around Auckland built to this level of quality," Brealey said.
"As general manager of Mirvac Developments back in the late 1990's my managing director Robert Hamilton told me: 'You don't go broke making a profit - developers mostly go broke for being too greedy'. And Bob's co-founder, Henry Pollack, would add 'always leave a little salt on the bread'.
"I don't want to sound like a know-it-all because there is a lot I am still learning. But with a construction and engineering background, it all seems very logical to me: do the basics well, get the product design and location right, understand the construction, pitch the product appropriate to the market, have your own cash so you are free to make the right calls and don't sit around. Time is not your friend as a developer in a heated construction market."
Auckland Council information on special housing areas says 'affordable' residences are being marketed at Hobsonville Point for below $550,000.
At the Otahuhu Mason Square scheme, 10 per cent deposits are lodged with solicitors Alexander Dorrington. The balance on settlement is projected to be due in the middle of next year.
The area where Mason Square is to be developed:
The project is by NZ Living, a joint venture between Brealey and Cooper.
"The price stated in the sale and purchase agreement is the price you will pay for your apartment," says Mason Square's web site, referring to price rises on other Auckland apartment schemes.
"Whereas a small number of other developments have been caught out by underestimating construction costs we have the majority of major building components quoted on agreed rates. An independent professional quantity surveyor has prepared a cost plan and our proposed bank funder has reviewed our development feasibility. Along with adequate provisions for escalation and contingency we are certain of our financial forecasts."
Brealey said resource consent to build was applied for on December 7 and received just two months later in February.
The scheme was marketed by Andrew Raines of sole agents Harcourts Preet & Co.
Deposits of 20 per cent must be paid if non-New Zealand residents buy.
"But we are not targeting these buyers and all to date are locals," Brealey said.
The titles are freehold and all units have car parks, except the studio places and two one-bedroom places to keep prices lower, Brealey said.