Auckland keeps seeing extraordinary land sale prices! Are you ready for the subdivision boom? Exploring land subdivision, part one
In mid-September, two ordinary homes built in 1960 in Pakuranga, east Auckland, sold together for an astronomical NZ$4,050,000, more than double their combined CV of NZ$2,005,000. A few days earlier, a homeowner in Papatoetoe, south Auckland, was persuaded by a neighbour to sell their properties together, making a profit of more than NZ$200,000 just six months after buying his property… These seemingly extraordinary stories have not been uncommon in the recent property market.
In mid-September, two ordinary homes built in 1960 in Pakuranga, east Auckland, sold together for an astronomical NZ$4,050,000, more than double their combined CV of NZ$2,005,000. A few days earlier, a homeowner in Papatoetoe, south Auckland, was persuaded by a neighbour to sell their properties together, making a profit of more than NZ$200,000 just six months after buying his property… These seemingly extraordinary stories have not been uncommon in the recent property market.
In an interview, New Zealand Chinese Building Industry Association president Frank Xu said that although a series of recent auction prices had been astonishing, with many competing explanations offered, an objective professional analysis showed these sought-after properties shared two characteristics:
- A sufficiently large land area, generally more than 800 square metres. For example, a Mt Eden property on 1047 square metres sold in August for NZ$50,000, more than $2,000,000 above its CV.
- A location in a zone permitting medium- to high-density residential development. For example, the two Pakuranga properties mentioned earlier were in the Terrace Housing and Apartment Buildings Zone and the Mixed Housing Urban Zone respectively.
“Auckland currently has a housing shortage and an imbalance between supply and demand, particularly for affordable homes. Subdividing large sites and developing townhouses or apartments offers substantial potential investment returns. This is one of the fundamental reasons behind the buying frenzy,” Frank Xu said.
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But securing a large site at auction amid fierce competition is only the first step. Even with land available, there is still a long way to go before subdivision and development can begin. Frank Xu said that, looking at the development process alone, each of the following steps was essential:
- Before buying land:
Carry out due diligence and prepare a feasibility report.
- After buying land, before development:
Prepare a more detailed feasibility report, an initial development plan, potential development options and a preliminary funding plan, among other things.
- Preparing for development:
Resource consent application: survey the site, prepare the resource consent design and obtain approval, and draw up preliminary cost estimates and a programme, among other tasks;
Building consent application: prepare the building consent design and obtain approval, and develop a comprehensive plan covering costs, timing, marketing and funding.
- Project development:
Construction: undertake tendering and construction management, including control of quality, timing and costs, as well as construction compliance management;
Marketing: develop and implement a marketing plan to maximise returns.
With land subdivision and development involving so many complex, specialised steps, how can you benefit from this widespread subdivision boom without becoming overwhelmed and unsure where to start? YIJU New Zealand and the New Zealand Chinese Building Industry Association will jointly launch a series of seminars, bringing together experts from across the land subdivision and development sectors.
What would you like to know about land subdivision? What professional advice do you need? Leave us a message on WeChat, and we will answer the questions that matter most to you at the seminars.
