We trust you are all well, staying positive and adjusting to the new normal following the move to Level 1.
It appears that New Zealand is in a unique position versus many parts of the world with the control of Covid 19. The next step will be how the economic impact will unfold and how New Zealand can take advantage of the gains made. Certainly, the flow of kiwis choosing to return home will be interesting to track in terms of New Zealand’s net migration figures in 2020, clearly population growth should assist the housing market.
As advised previously, Haydn & Rollett was able to get back to work on site once we entered Level 3, however this was in a relatively restricted manner.
Level 2 enabled better progress and Level 1 is for all intense purposes back to normal. Since entering Level 1 Haydn & Rollett have been able to work out the actual delay to the project as a result of the Level 2 & 3 restrictions. This has now been formally calculated as a 26 working day extension of time, this results in a revised completion date of 26 August 2021.
As we draw closer to the completion of the project this date will be firmed up as there may be some gains to be made. There have been no issues with the supply of materials or labour that will impact the project. In terms of recent progress on site, the project is advancing well. At the time of writing this newsletter the level 3 floor has been completed and the site team has laid the level 4 floor to the rear of the site. We are anticipating that the roof will be in place by the end of August 2020. From level 3 & 4 you get a real appreciation of the outlook from the rental apartments.
The Western facing apartments get great views to the Waitakere’s, the Eastern facing apartments have significant separation from the Business Centre and a decent outlook towards Maungawhau, Mt Eden. The Apartments on the Edwin Street frontage have plenty of set back from the neighbouring properties, courtesy of Edwin Street and the Zone 23 property been located off the front boundary to provide car parking. All in all, we are extremely pleased with the layout of the building. The Woodhams Meikle design team have done a great job setting the building on the site.
Haydn & Rollett have continued to keep the neighbourhood informed of upcoming progress. Over the last couple of months, the residents of the neighbouring terrace homes have not had access to some of their car parks while we were digging and placing services in the shared right of way. The Haydn & Rollett site team have been able to find alternative car parking for the residents and has kept them informed during a pretty messy time of the project. The car parking area is now back in action with new upgraded asphalt in place.
The building will definitely be prominent on Edwin Street, if you get a chance, take a drive-by making sure you take a look at the depth of the building down the driveway on the Western side of the property.
On the design side of the project, we are almost through the finalisation of all the finishes. We are also working towards converting the ground floor commercial unit to a multi-purpose co-share working and meeting/function room. This will be available to the residents, Quest and potentially the local community.
We believe that this will be well received and provide a point of difference for residents. Given the growing trend to work from home, we do think that this will be an attractive addition for residents looking for alternative space to their apartments to conduct business or to entertain guests.
Our website www.residentproperties.co.nz has a number of project photos if you’d like to view our progress, we’ll be updating these on a monthly basis.
We have recently branded 34 Edwin Street as The Ed – Mt Eden, we believe it is important that each of our projects has an identity for our residents and investors. The developed logo has also enabled us to advance general building signage. The apartments are serviced from a separate foyer and lifts to Quest which enables separate identities and signage.
Despite many commentators predicting that the value of the Auckland housing market would be negatively impacted by Covid 19, at this stage this has not materialised.
Although the number of sales is down from the same period 12 months ago, the Auckland region median house price has risen 9.2% from 1 June 2019 to 1 June 2020. More specifically the Auckland City median price has risen 17.1% from 1 June 2019 to 1 June 2020 with a median price now of $1,147,500.
This could simply be a catch from the lack of activity during the lock down resulting in shorter term demand outweighing supply or it could be a longer-term outcome from the increase in returning Kiwis to NZ, time will tell.
On the rental market front, anecdotally there has been an increase in the supply of rental housing as more AirBNB property comes to the market, courtesy of the downfall of the tourism market. However, over time we would expect this to be absorbed particularly as New Zealand slowly re-opens its borders.
We are expecting a slowdown in new housing supply which will ultimately result in less new entry rental housing to the market. As we draw closer to completion of the project in 2021, we will understand the rental market in more detail as it presents itself.
We have been in regular contact with Quest to check how they have been tracking as a result of Covid 19 and border closures. Feedback from Quest to date is that the network, all things considered, is performing well. Quest have tended to be a domestic provider and were not as exposed to the overseas tourism market as other operators. Quest opted not to be included as Quarantine facilities which has had the benefit of picking up business from some of their usual competitors that have taken up the Quarantine roll.
Quests occupancy rates for June highlighted that they have tended to be at higher occupancy levels than the rest of the market and each month domestic occupancy has risen.
If you have an interest in staying at a Quest around the country check out www.questapartments.co.nz.
We continue to cautiously review a number of other opportunities in the Auckland build to rent market for Resident Properties.
These opportunities must complement our portfolio and be in line with our key objectives for the company.
Any new project will undoubtedly require the introduction of new capital and debt. As existing shareholders, we will let you know as soon as we can of the likelihood of further capital raising as the opportunities are advanced.
As usual if you have any questions at all, please do not hesitate to make contact.
We wish you all the best.