Three years on, another major blow! Buyers have nowhere to turn!

The image below is an artist’s impression of a residential development in Auckland.

 

 

Flowers mingle with trees in a dazzling display. Simply calling it beautiful hardly does it justice! 

 

Yet it is only an artist’s impression. Settlement has been delayed by 3 years, and buyers still have not moved in!

 

Now another major problem has emerged!

 

Voids have been discovered beneath the construction site. Filling them will require considerable labour and additional materials, throwing the apartments’ completion date into doubt again!

 

The Alexandra Park apartment development in the Epsom/Greenlane area has 246 apartments, making it one of New Zealand’s largest apartment developments. Advertisements from 2016 priced the apartments between NZ$585,000 and NZ$2,000,000, placing the development at the premium end of the market. 

 

Buyers should have moved in during the booming market of 2016. Now house prices have fallen, and they still have not moved in. How are they supposed to bear this? 

 

Construction workers have now discovered large quantities of rock beneath the site, with hollow spaces inside. Misfortunes really do come together! 

 

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Rod Croon, vice-president and acting chief executive of the developer, Auckland Trotting Club, confirmed to the media yesterday that the rocks contained hollow spaces and that the problem was real, although it was unclear whether there were caves underground. 

 

He also said that once the problem was established, remedial work would begin immediately, with workers injecting cement into the voids. Croon stressed that he had not been involved when the project was planned 5 years ago and was not even a board member then.

 

 

 

However, Croon said the large amount of cement to be injected into the voids would make the apartment foundations stronger than originally designed, so buyers need not worry about the apartments’ quality. A worker on site said the underground voids had surprised everyone. They measured hundreds of cubic metres and would require grout and cement worth millions of New Zealand dollars. 

 

Croon also revealed that Block A would be completed by Christmas this year, although the official date was 28 February 2020, while a more realistic completion date for Block B was 30 April 2020. 

  

The direction and risks of Auckland’s housing development

 

Looking ahead, Auckland’s population will continue to grow, and high-density housing is bound to become widespread. Buyers must, however, understand the potential risks of buying an apartment!

 

Put simply, buying an apartment off the plans carries 3 risks:

 

First, Changes to school zones

 

Access to a school zone is an essential requirement for many buyers and is often a selling point for apartments. 

 

However, as apartment developments are completed, population density within a school zone can surge over a few years. When schools cannot accommodate more students, their zones are redrawn. Some apartments then fall outside the zone.

 

Second, The project falls through and the building never goes up

 

Alexandra Park has suffered construction delays, but reports of apartment developments falling through have also surfaced from time to time in recent years.

 

Auckland’s landmark St James apartment development fell through in late 2016 after its funding dried up. Once buyers get their deposits back and look for another new home, they may well find that prices have risen again.

 

Artist’s impression of Auckland’s landmark St James apartment development

 

Third, A long construction period as the housing market turns from boom to bust

 

Alexandra Park is a clear example. The market has already cooled, and buyers who resell now can only do so at a loss!