NZ’s biggest build-to-rent development yet opens

Tuesday, 11 June 2024

New Zealand’s largest build-to-rent development was officially opened in Auckland on Tuesday, and it heralds a new era for the rental market, the developer says.

Resido, a 295 apartment complex at Sylvia Park, is the NZX-listed Kiwi Property Group’s first build-to-rent development, although the company has plans for more.

Build-to-rent developments are large scale, multi-unit residential buildings which offer long-term rental agreements, are professionally managed, and do not offer apartments for sale to individual owners.

Kiwi Property announced it would be making a move into the sector several years ago, and has also said it was transforming Sylvia Park, the country’s largest shopping mall, into a “20 minute city”.

But Kiwi Property Group chief executive Clive Mackenzie said the official opening, which was attended by Prime Minister Christopher Luxon and Housing Minister Chris Bishop, was a significant milestone towards the goal of creating that mixed-use community.

Internationally, build-to-rent developments were a successful asset class, and the model had great potential to provide a better housing experience for renters across the country, he said.

“It is a new and innovative way to help address New Zealand’s housing shortfall, and will offer renters high-quality, purpose-built housing which gives them security for longer.

“But it is more than just bricks and mortar. It is about creating a community where people feel valued and secure. We are dedicated to providing not just houses, but homes where people can build their lives and connections with neighbours.”

Resido is made up of three towers of apartments of varying sizes, all with balconies, and the complex has a gym, rooftop barbecue and entertaining area, co-working spaces, a community garden and on-site management.

Residents can have pets and decorate their apartments as they want, and – provided they pay the rent and do not behave in an anti-social fashion – they can rent there for as long as they want.

The weekly rent paid would depend on the apartment size, and ranged up from the low $600s for a 43m² studio apartment.

A 51m² one-bedroom apartment would be in the high $600s, while an 80m² two-bedroom, two bathroom apartment would be in the high $800s.

Mackenzie said rents would be set at market rate, but would also reflect the amenities available in the complex.

He did not think rents in the $240 million complex would boost rental prices in the broader market, and said more rental supply provided more stability for the market, and might limit rent increases.

“As Resido is our first build-to-rent offering, we want to make sure it is up and running, and prove the concept works, before moving on to another project.”

But there was scope for up to 1000 build-to-rent units in total at Sylvia Park, and scope for up to 600 at Kiwi Property’s Lynn Mall in New Lynn, he said.

Prime Minister Christopher Luxon said the development was “ground breaking”.

Build-to-rent was a concept that had been talked about for years, and to be at the country’s largest development of its type for real was inspiring, he said.

“The bottom line is that New Zealand does not have enough houses, and faces major supply challenges. But this Government is committed to addressing the problems as housing sits at the heart of all we do.”

There were two parts to the Government’s plans to tackle housing, he said.

They were the Government’s “going for growth” plan which would free up more land for development and fix the Resource Management Act, and work to lower the cost of construction.

At the opening, Housing Minister Chris Bishop announced he was introducing legislation to parliament that would make changes to the Overseas Investment Act to support build-to-rent developments.

It would create a new streamlined consent pathway allowing investors to purchase land to build a new build-to-rent development or purchase an existing one, he said.

The Government’s recently-issued directive on build-to-rent investment which declared New Zealand was open to foreign investment in the sector would support it.

Bishop said the Government wanted to see more high quality developments like Resido, and the legislative changes would remove the barriers to foreign capital being invested in them.

But the foreign buyers' ban on overseas investment into existing residential housing and land would remain, he said.

“The changes in the legislation are all about adding to supply of housing and making it easier for Kiwis to get into a warm and dry home.”

Mackenzie said Bishop’s announcement was important for the sector as the build-to-rent model was well-known overseas, and there was big interest from overseas capital in investing in developments here.