The number of Auckland CBD apartments sold off the plan has hit one of its highest ever levels in proportion to what’s currently available, according to the latest research from real estate group CBRE.
Data for the third quarter shows that 82% of all the units in the city centre apartment pipeline have been sold which is a record in the current property boom, according to CBRE Research Analyst Tamba Carleton.
This latest figure represents a two percent increase on the second quarter results and an eight percent increase on the third quarter of 2015.
“The proportion of presales in the city centre has been steadily increasing over the last year.
“The market has responded positively to the apartments launched to date, with only 18% of the current CBD apartment pipeline still available for sale,” says Carleton.
Auckland Council's Design Office General Manager Ludo Campbell-Reid says the popularity of inner city apartments signals a cultural shift.
“The apartment lifestyle offers, in essence, a new way of living for Kiwis. We are changing as a nation. We are urbanising: for me there is an emerging Kiwi urbanism.
“Apartments are now considered a viable way to live for typical citizens, not simply an investment for someone else to live in.
“It signals to me that we are growing up as a city, becoming more urbane and becoming more aware of the benefits of this way of living,” says Campbell-Reid.
CBRE’s Director of Residential Projects Gavin Lloyd says the popularity of living in the city is being fuelled by the improved quality of inner city apartments.
“We are seeing more high-quality boutique apartment complexes like Library 27 from Belgian developers Eaglestone who recently entered the Auckland market,” says Lloyd.
Neighbouring the Auckland Art Gallery at 27 Rutland Street, Library 27 is a 49-unit complex being developed in response to the growing demand for a higher grade of inner city living as people look for alternatives to rising house prices, explains Lloyd.
“What’s critical about Library 27 is the developers are Belgian so they’re not dependent on local bank funding which as we’ve seen recently has proved to be a real stumbling block for some developers,” says Lloyd.
The latest CBRE research confirms the increase in quality of inner city apartments in the pipeline. Figures show that for the second quarter running the percentage of owner-occupier grade apartments in the CBD pipeline is 42%.
Of the 31 projects, comprising 3,750 apartments, in the CBD pipeline due to be completed between now and late 2019, only 58% of the stock is targeted at investors, with the exception of student apartments.
This is a stark contrast to the development boom between 2003 and 2006 which saw the proportion of investment-grade apartments in Auckland climb to almost 90%.
“Generally speaking, apartment complexes aimed at investors have a high number of units, typically more than 100, and they tend to be of a lower quality and smaller size.
“Projects aimed at owner-occupiers have a smaller number of units, generally less than 100 on average, in order to provide more spacious living spaces – like what we’re seeing at Library 27,” says Lloyd.
CBRE research shows that just over 2,500 apartments have been sold off the plan in Auckland so far this year, of which over 1000 were in the city centre. There is also very little of the current Auckland apartment pipeline available, with only around 1,700 of the upcoming 8,600 units still available for sale.
The population of the Auckland CBD is currently estimated to be around 43,000 – a marked increase on the 17,937 residents at the time of the 2006 census.
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ABOUT CBRE GROUP, INC.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.