This is the problem with intensification. It’s hard to build.

Yet planners at Council believe that by squeezing their eyes shut and wishfully dreaming – Auckland will transform magically into a wonderland urban oasis of goodness. It’s so easy and developers are land banking or being lazy they say.

The problem is that property development is insanely difficult. That’s why developers go bust so easy. One mistake and it’s over.

Auckland’s troubled Orakei Bay Village project has been resurrected on a smaller scale.

Development company Equinox Group has been trying to develop a block of land adjacent to the Orakei Train Station for almost a decade.

The process has been plagued by consenting issues, escalating construction costs and opposition from residents.

In late 2015 the company shelved the project, cancelling $100 million worth of off-the-plan sales.   

“I’m as frustrated as they are,” Equinox director Kerry Knight says.

“We had some buyers we let down. I’m also frustrated a prime piece of land like this can’t be developed.”

After much hand wringing and sweaty nights the much needed consents come in so late from Council – that the construction market has increased costs resulting in the project no longer being viable. See – too bloody hard.

Mr Knight is no amateur from what I can gather. But he is like so many developers out there – they find intensification a struggle. I bet he would rather have a wedgie than go back through that process again.

It’s also quite obvious that very few New Zealand constructors have the skills to deal with intensive projects. As soon as a rush goes on they all get bogged down with a back log of construction jobs and costs increase.

Which means plenty of projects get canned.

Not forgetting that Auckland Council is a donkey’s arse at consent processing.

So it’s no wonder that nobody believes in the same utopian dream as Council. Because it’s too hard and nobody can be bothered.

 

– Fairfax

 


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  • Richard

    The actual physical process of carrying out the construction is not the “insanely difficult part”, for skilled tradesmen,it’s very easy in fact, the same methodology has been around for centuries and can be applied from small residential, right through to large commercial projects.

    The insanely difficult part is waiting for and battling with consent & RMA process, which as you say starts to affect cash-flow and in turn kills the development.

    Take China for example and their recent building boom.

    These guys were building whole cities, one after the other, in the same time it would take a proposed Auckland development, with culturally sensitive issues and/or meddling nimby’s, to even get to turning earth stage.

    Why?, because for better or worse the Chinese government took control of all aspects and any one getting in the way would be hit on the head (literally) with a very large stick.

    If this is really at the crisis levels that opposition keep repeating, then no one should have a problem with a crisis based response.

    Call a state of civil emergency, as has been done in Christchurch and sort out the planning process debacle once and for all.

    • Chinaman

      Richard,

      The Chinese Government don`t ”take control of all aspects” but control the land and partner with development companies for the big projects.State owned banks are also part of the equation.

      The planning process involves lots of long boozy lunches and dinners to sort out problems and is a far more efficient method than the NZ consenting process!

      As for ”people in the way being hit on the head with a stick”,not entirely true as you get compensated for your building if the Government wants it for development.Close to where I live a subway station has been delayed due to the negotiations being stalled with the owners of a property and Govt. not being able to agree on the price for compensation.

      But you are right that the Chinese Govt. does weld a big stick and also you can`t believe how fast they can build high rise dwellings here..they could sort out Auckland`s supply problem in blink of an eye,might lose the odd golf course and harness racing track in the process though!

  • Greg M

    A mate of mine in the process of developing a 20 unit infill in very similar situation to this one. So far the consent process has taken almost 3 years and has cost $560k. Just for the council consents. It’s just completely out of control.
    One way to simplify the thing could be to have pre approval for certain designs. For example, in a 3 level reinforced concrete building, the columns and beams etc are pretty much identical. Why can’t there be a list of pre approved structural designs that automatically get consent?

    • jonno1

      That reminds me of the Winstone’s Book I used in the good old days for retaining walls and the like. Overkill with lots of steel but no engineering costs. Just rocked up to the local borough council with a sketch and reference to p20 or whatever and Bob’s your uncle, job done. Actually, come to think of it my structural engineer still has standard designs for walls to various heights.

      • David Moore

        Big and dumb is often a much cheaper solution than spending a lot of engineering hours to save a few dollars on materials and labour.

        • biscuit barrel

          Same used to be for poles for wooden retaining walls, suppliers had sheets for the depth in ground for various situations for an average wall.

          • jonno1

            That’s true, I think it was typically 50:50, ie for a 1.2m wall the in-ground depth was also 1.2m at a specified lean and spacing.

          • biscuit barrel

            Now days you cant even be certain about the concrete anymore, as has been discussed here.
            hate to think about those instant cities in China in 20 years.

    • andrewo

      I had a new deck put on my house a couple of years ago and because it was at height I had to get building consent. The piles employed were straight out of the NZ standard but the council insisted I had to redraw the exact same detail (at great expense) on a separate sheet rather than just adding a note on the general arrangement referring to the NZS and the figure number. I also had to use stainless fittings throughout, despite the fact that the original galvanised coach bolts dating from the 50’s were still in perfect condition.
      By the time I had got the deck approved there were more drawings for it than the original build had been for the entire house!
      If I have this palaver for a replacement deck, imagine what a developer faces!

  • rua kenana

    Property developers going bust are no different from attempted operators in any other industry going bust. That’s what an efficient economy does. It weeds out those that can’t handle the going conditions and encourages them into alternative business areas or geographical areas where, if they’re any good, they could make a go of it.
    Special groups asking for, or hoping for, special government intervention does very few of us any good at the end of the day.
    And personally, I prefer government by democracy rather than government by political lobbying.

    • contractor

      Partly true for sure, aggravated by business cycles which in construction and development are particularly extreme, breaking continuity and experience of developers. The very few smart ones are the cautious long term players.

  • jonno1

    I’m not sure of progress on the Newmarket development over the rail triangle, but that has gone awfully quiet too. I looked at both of these, but eventually bought elsewhere due to the incessant delays.

  • contractor

    Exactly, that is why government has to put in place regulations mandating that councils measure and match housing supply with population growth. Development and construction are cyclical of course which makes it entirely uneconomic and too risky during the norm of a 4-5 year recession, leading to pent-up demand outstripping supply as we have now.

    The cure? Smooth the supply data and also reduce the hurdles and costs of development. The bane of the construction industry is the severity of its cycles which is why with every downturn workers and developers are forced out often permanently, then with every boom there is a rush, too late, to increase new worker training or as now immigrants, only reaching the short term necessary resources just in time for the ever looming recession.

    Your other point; green fields developments are much less risky and costly, whereas “brownfields” (meaning anything within confines of existing developed buildings and infrastructure (roads, watermains, sewer and stormwater drainage, telecomms) is much more costly, risky, and slow from concept to completion.

    Something like 80% or more of developers went bust from the last crash, and that has been normal for decades. Yet councils’ attitudes are that developers are rich sods who have to fund council’s glamorous and costly ideals. Developers and contractors etc often do well for a few years then wham, business crashes.

  • Odd Ball

    it should be remembered that the ‘leaky buildings’ were built according to the regulations at the time, which caused the dilemma of who’s responsible when it all went to custard. Builders are unlikely to build to a higher standard than required (unless specified) as this just prices them out of the market.

  • cod

    Friends of mine who use to live next door sold up 3 years ago and wanted to build a home at the back of one of their sons places. They were getting on in years, late seventies, and it would be handy to be close, medical etc. I just found out a month ago they unfortunately passed away, the home never got built, still locked up in consenting process.

  • PersonOfColor:WHITE

    Create a power structure and the ‘little Hitlers’ come out of the woodwork. Let’s just publish the rules and pass the consenting over to commercial markets. They would be climbing over each other to issue consents and make money.

  • localnews

    It also doesnt suit the way most of our builders are set up. One or two man bands find it pretty simple to go to the bank, build a house and onsell it. Much harder to finance an apartment complex so the small guys get cut out of the market.
    In my opinion our housing stock is much nicer than Australias because there is a such a variety. Once the massive companies start building residential it all looks the same

  • Intrigued

    I was shocked the other day to hear the infrastructural development council fees for an apartment in the city is $20k per bathroom! That’s before you even consider the actual building and material costs, the building /resource consent fees, cost of land etc etc. The person I spoke to also mentioned a cost of $4000+ per square metre being the building cost. How on earth can you develop “affordable housing” in the city with those kinds of cost? No wonder developers are shying away.

  • Superman

    The consent process is not only too hard but insanely expensive. Why is the cost of a simple subdivision in Pakuranga in excess of $100 000? Does it cost this much for an inspector to take a look and see if it is feasible? No wonder housing is so expensive.

  • Mark

    So private developers want to build dense housing, but consenting issues, escalating construction costs and opposition from residents are holding them up. This is contrary to whale oils narrative, which seems to be ‘freeing up land is the only solution but don’t worry about the red tape, rules and regs that are stopping market intensification’. The market wants to intensify, and it would if the council and RMA got out of the way

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