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Real Estate Investar Blog

Developers of NZ's tallest apartment block don't face local funding problems

Developers of a new 57-storey tower in downtown Auckland may have the upper hand over struggling local apartment developers.

The Auckland CBD apartment market has started to hit trouble over recent months as banks tightened up lending criteria – making it harder for developers to get finance, and for buyers to settle on deals.

Construction costs have also risen markedly, but developers have not been able to increase their presales to compensate for that.

The Saba development on Fanshawe St has recently been listed as a mortgagee sale - its problems rumoured to be due to the escalating cost of the build.

But the $300 million 57-storey, 178m Pacifica development on Commerce St, downtown Auckland is not expected to have the same concerns,

It will be New Zealand's tallest apartment tower and work is set to begin next month.

Property developer and former Auckland Property Investors Association president David Whitburn, of Fuzo Property, said the developers, Hengyi, had the weight of a significant Chinese listed company behind them.

"I think this will go ahead. They have so much equity and equity is king in the property market now."

Apartment real estate specialist Martin Dunn, of City Sales, said more apartments were needed in Auckland.

His firm's projections are that the number coming on to the market will have dropped to 450 by 2022.

The current problems in the market were likely to be a temporary blip, he said.

It was reported the development had taken deposits more than half the units in August, worth about $200m. Up to 30 per cent of the pre-sales were to overseas buyers, mainly Chinese.

Whitburn said it was likely to be a quality building, judging by Hengyi's projects overseas. It will have 282 apartments, a hotel, restaurant and cafe.

Developers said it would have views out to Great Barrier Island, and a glass facade to reflect the surrounding city and harbour.

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