Ngati Whatua ready to raise city rents

Vector Arena's management have been paying a percentage of turnover already. Photo / Herald on Sunday

Thousands of apartment owners on Auckland's waterfront will be hit by steep leasehold land payments from later next year.

Land owner Ngati Whatua O Orakei Maori Trust Board will begin charging what is estimated to be around $15 million in annual rent from next August.

The iwi's windfall will be a new expense for apartment owners and commercial landlords, many having enjoyed a 15-year ground-rent holiday on the 20ha block worth about $460 million.

The new leasehold land payments will fall due on many of the buildings put up in the past few years, including the Vector Arena, Countdown supermarket, three Scene apartment blocks, the Hudson Brown block of residential units, The Docks apartments, Quay Park Health, Grand Central Railway campus, a string of hotels, other apartments, shops and restaurants.

Building owners will pay 5 or 6 per cent of the total value of their land, net of the value of buildings.

Not all building owners have been let off the ground rent: Vector Arena's management have been paying a percentage of turnover but that will change.

Ngati Whatua chief executive Tiwana Tibble said some building owners had already approached his office on level six of 99 Queen St and struck successful deals.

"We've done a couple of early settlements already, instead of waiting till next August. If nothing happens, three months out from next August we will issue our assessment. If [lessees] don't accept it, they go to arbitration.

"Parties will come to us and say they are interested in settling."

He has stern words for building owners: "If you want to arbitrate, you want to think about that quite seriously. It's a very costly exercise. If we can reach agreements, we're better off. The last resort is to go to the lawyers," Tibble said.

Trust board chairman Grant Hawke warned of dangers from the huge influx of cash.

"We are going to find ourselves with more cash to work with soon. The great danger is that this is viewed as a gold rush and we lose sight of the need to use what we have wisely," he said.

Tibble referred to Ngati Whatua's bid for a national convention and exhibition centre on a 3ha block behind the old railway station site, saying the iwi's land was perfectly-positioned for the new building because it was flat and close to the CBD and waterfront.

Graeme Horsley, a valuation expert and corporate board chairman for Ngati Whatua, said the money would transform the iwi and was at least the start of compensation for loss of 55,000ha of tribal lands through crown and settler purchasers from 1840 to 1855.

"It's going to be like a lifeline for them. It will be the first time they have been able to say they have got something for the land they used to own in Auckland. It's an amazing turnaround and many of the older people have waited 15 years for this," said Horsley.

Ngati Whatua bought the Quay Park land from the Crown in 1996, initially attempting to get approval to build Auckland's casino there.

"Although unsuccessful in its casino bid, Ngati Whatua entered into a joint venture agreement to eventually purchase and then develop commercially the site on a leasehold basis," it said.

"Ngati Whatua also on-sold a 150-year terminating lease in consideration for the first 15 years of rent being prepaid."

Tibble recalled how Ngati Whatua also tried to get Australian retailer David Jones to the site.

The iwi said the original strategists who planned the land acquisition for Ngati Whatua "can only be described as visionary. Capital growth on the lessor's interest has been astounding and the first year's rental is predicted to exceed $15 million per annum".

Iwi Land Base

Ngati Whatua's property:

* 20ha of Auckland waterfront.

* Could generate $15m annually.

* Land worth about $460 million.

* 150-year terminating lease.

* Rents reviewed every seven years.

* Payments due by next August.