Unitary Plan: The only way is up, right?
Some thoughts on the Unitary Plan: Auckland is a unique city surrounded by so much water and then so much of the inner city has been protected from a planning perspective. There has been very limited land supply and what has been built (in terms of higher density) has been either ugly or lacked integrity, or in a lot of cases, both. Think about a lot of the leasehold development done in the past decade. Under the Unitary Plan there will be no shortage of land available for higher density development. Importantly, this should help keep prices from getting carried away.
The existing arduous process of gaining consent for projects should be simplified and give developers more certainty around both timeframes and costs. With more land supply and more certainty over what can be developed hopefully more margin will be passed through to the developer (rather than the land owner.) This will encourage developers to build better developments which is a win win for all. Up until now land supply has been a critical issue. The ‘per square meter’ rate on land is already making it difficult to build anything other than high density. Town-houses will be a challenge.
One of the challenges will be building stuff that is consistent with our aspirations as a city – not cheap and ugly like a lot of the development done in the 1990s and early 2000s. I think the future is going to be lots of low rise apartments (up to 5 or 6 stories high.) They’ll move away from being “rental apartments” and will be much more liveable. A lot of effort will go into making them appealing, both inside and out. They’ll be larger (130-150sqm) and they’ll have access to much better outdoor areas. I think a lot of this stuff will pop up around the city fringe – Kingsland, Remuera, Mt Eden, Ponsonby, Grey Lynn, Takapuna. It will also spill out to areas like Avondale and Ellerslie. There are plenty of examples being sold off plan at the moment. It will mostly be owner-occupied, which importantly, gives first home buyers something to look forward to.
High land costs are one thing but at the moment we have the double whammy of high construction costs. With commodities collapsing and Christchurch rebuild slowing down in the next 3-5 years I live in hope that this will pass through to lower construction costs. Doesn’t seem to be a lot of point building now with everything in the pipeline or already getting built. Also, there is a sense that we will face some sort of market correction in the next 2-3 years with the potential for over-supply at that time. Do you buy land strategically now, and then camp out and wait for the construction market to soften? A 20% reduction in build costs would have a significant impact on the feasibility of a project.