Major changes ahead for the Overseas Investment Act? Prime Minister opens a new chapter for build-to-rent

Yesterday (11 June), New Zealand Prime Minister Christopher Luxon and Housing Minister Chris Bishop marked the completion of New Zealand’s largest build-to-rent housing development. Luxon said New Zealand needed more homes and more high-quality rental properties, and that providing tenants with more quality rental homes was key to easing the country’s housing shortage.

 

New Zealand’s Prime Minister and Housing Minister yesterday marked the completion of the build-to-rent

apartment development

 

Resido, a development with 295 new apartments, is located at Sylvia Park

 

The build-to-rent housing development was reportedly built by Naylor Love and is owned by NZX-listed Kiwi Property Group.

 

Housing Minister Bishop said he would introduce legislation to Parliament to amend the Overseas Investment Act, creating a new streamlined pathway allowing overseas investors to buy land in New Zealand to build more build-to-rent developments or purchase existing developments.

 

Bishop also said the legislation would be supported by the directive on build-to-rent investment recently issued by David Seymour and himself, which established that the New Zealand Government was very open to overseas investment in build-to-rent developments.

 

Kiwi Property Group chief executive Clive Mackenzie speaks at

the opening ceremony for the Resido apartment development

 

In his address, Kiwi Property Group chief executive Clive Mackenzie said the day marked a significant milestone in the company’s history since his appointment in July 2018. In the United States, build-to-rent was continuing to develop as an important investment asset class.

 

A Kiwi Property Group spokesperson said 17% of the development had been leased, including 34 apartments leased by Australian flexible accommodation provider Urban Rest and a further 15 apartments leased or contracted to individual tenants.

 

Notably, Kiwi Property Group’s annual results released last month showed that starting weekly rents at Resido ranged from NZ$625 for a 43 square metre studio to NZ$1,235 for a 111 square metre apartment with three bedrooms, two living areas and a 22 square metre balcony. These prices surprised many industry observers, who said they were more like hotel accommodation charges than affordable residential rents. Parking was also excluded. Fortunately, Sylvia Park has convenient transport connections, with a railway station and bus interchange, and sits at the junction of two motorways.

 

Mackenzie said Kiwi Property Group was seeking innovative ways to address the housing shortage, and that build-to-rent developments offered secure long-term tenancies. He also emphasised the convenience, comfort and quality amenities available to tenants, who could even bring pets and personalise their apartments to suit their tastes. He also mentioned the forthcoming Ikea home furnishings store across the railway line at Sylvia Park.

 

Interior photographs of the apartments

 

In February this year, Kiwi Property Group announced that Urban Rest would lease some of Resido’s apartments. Urban Rest founder and chief executive David Whelan said Sylvia Park was his company’s first investment in New Zealand. They saw enormous potential there, particularly given strong demand for accommodation from Auckland businesses. The development also occupied a prime central location in Auckland, with convenient access by public transport and car. He looked forward to expanding the company’s New Zealand operations through the Sylvia Park project.