Oriental Markets site sold

Quay Park developers give up on mall ideas but are optimistic about completing the rest in quick time, as BOB DEY reports.


Quay Park's developers have sold the 2.37ha Oriental Markets site at the city end of Auckland's old central rail yards to a Taiwanese financier who had been backing their project.

The price is about $20 million, $886 a sq m for 150-year leasehold land, taking into account issues such as capitalised interest and the cost of an existing project proposal which would use the old railway sheds.

Australian department store operator David Jones announced plans in 1996 for a $400 million mall which it would anchor, but pulled out in 1997. Development company Quay Park Mall, run by the developer of the overall site, Magellan Orakei, then worked on various schemes, including a proposal late last year to Auckland City Council for a convention centre.

Another plan, the Gateway Centre, entailed using the existing 7000 sq m building and its 9m stud, plus space beside the structure for a department store, supermarket and about 80 specialty stores.

Magellan Orakei managing director Robin Sheffield says that scheme would have cost about $85 million with a forecast end value of $120 million, but it was hindered by uncertainty over the neighbouring Britomart redevelopment and timing of putting down the rail tunnel through the site to Britomart.

Importantly, says Sheffield, "it would be better done by someone with a balance sheet bigger than ours."

One Taiwanese businessman, Sheng-Wen Lu, took out the second mortgage on the Oriental Markets site held by three other Taiwanese two years ago and is now looking at options with law firm Knight Coldicutt and Equinox Group director Chong du Cheng.

"Equinox will manage the project, whatever it's going to be - there are a lot of options," says lawyer Kerry Knight. "Equinox manages projects and funds, so we're likely to team up with a developer. I'm thinking of doing a tender.

"We've done a scenario showing terraced houses that makes good profit, a convention centre is an option, the old building would make a fantastic home for advertising or computer companies and two supermarkets want to get in there."

Having got the mall site off his back, Sheffield is positive about progress over the rest of the site. Work starts on Monday on the open cut beside Quay St which will take the rail tunnel through to Britomart. By making an open cut then covering it, about $12 million is saved. Most of that work is due for completion next March and the balance by the end of June.

Immediately to the east, Magellan Orakei is planning a subdivision, and Sheffield says the level of inquiry makes him confident work should start soon on the first building of a joint-venture office park with AmTrust Pacific.

Its design has been amended after a proposed medical centre on Beach Rd took more space, but the office park will still contain 25,000 sq m in seven buildings.

One apartment development is well under way - Quay Park Terraces by Nigel McKenna's Melview Developments. Work is due to start soon on another, Broadway's Parnell Terraces, and a third, 88 The Strand, is also close to a start. One project with uncertain timing is the city council's entertainment centre next to the old railway station, which has been converted to student accommodation.