One thousand apartments are being built on Auckland's North Shore, but critics say apartments are 'not the kiwi way,' Aaron Tunstall thinks they're wrong
Aaron Tunstall is the general manager of award-winning Impression Real Estate, which specialises in property management and investment sales and manages over 1,750 Auckland Apartments.
With 1,000 apartments currently under construction on the North Shore, apartment critics are not happy. Apartments are “not the Kiwi way,” is the theme of a recent article in Stuff about the developments. This attitude seems to stem from the idea that New Zealanders must live on a quarter- acre section in a standalone house, whether they want to or not, because that’s the way we always used to do it. By that logic, same-sex marriage and having more than two TV channels aren’t the Kiwi way, either. Times have changed and the way Kiwis live is changing, too.
The invention of the internet means New Zealand might still be geographically at the end of the world, but metaphorically the distance has shrunk. We’re part of an international community and Auckland is our most international city. More people want to live here and immigration is, well, ‘robust’ to put it mildly. That means we need to provide more housing, including a range of housing options at varying price ranges. There’s no one ‘Kiwi way’ to live and despite what you’ll hear, many New Zealanders love living in apartments and do so by choice.
Living In Luxury
To demonstrate that fact, around half of the projects underway on the Shore are dominated by luxury apartments. Is it the Kiwi way to live in a $1.4 million, three- bedroom, two-bathroom apartment with sea views in Takapuna? Sounds like a pretty nice way to live, in my opinion.
No gardening, almost no maintenance, very safe, lock up and leave. No wonder baby boomers are downsizing into apartments.
I believe the proportion of luxury apartments to affordable ones is far more of an issue than the fact that apartment living is ‘not the Kiwi way’. Apartment developments are being consented in part because they contribute to the type of medium-density environment the Auckland Council is promoting.
❝If I were given the choice between that house in Kaikohe or a one-bedroom apartment in Lambton, I wouldn’t hesitate for a second❞Aaron Tunstall
However, when many of these apartments are in the million-dollar-plus range, I’m not sure they’re contributing much to affordability.Naturally, if you’re a small apartment investor there’s an upside to all this. Despite 1,000 new apartments being constructed, there’s only a slim chance of any devaluation of existing small apartment stock. Small apartments, with their high yields, remain an excellent investment. Just take a look at the list of highest-yielding suburbs published in this magazine last month: Lambton, Wadestown/Thorndon, Mt Victoria/ Roseneath and Te Aro in Wellington; Central East and Newton/Grafton in Auckland– one-bedroom apartments (and in some cases two-bedroom apartments) are the highest-yielding investments across both cities. One- bedroom apartments in Lambton were number two overall, just behind three- bedroom houses in Kaikohe.
It may be that the Auckland market is now flat, but rents are up 4.3% year-on- year for apartments, bringing the average asking rent on Trade Me to $480. If prices remain stable, the yields on these smaller apartments will only increase. I think it’s quite possible some of those 1,000 apartments on the North Shore (and the 1,000 apartments under construction in Wellington) could make superb buying off the plans. With a 10% deposit and a couple of years of rent rises up your sleeve during the construction period, you could find yourself with a brand-new cashflow neutral investment apartment – and a long list of fantastic tenants clamouring to be chosen to move in.
The longer people believe that apartments are ‘not the Kiwi way’, the longer it will take them to realise what a good, solid investment apartments make. I know the Kiwi way is to own a three- bedroom weatherboard home on a bit of grass, but if I were given the choice between that house in Kaikohe or a one- bedroom apartment in Lambton, I wouldn’t hesitate for a second before I grabbed that apartment with both hands.