_Bayleys Knight Frank offers rare land development investment opportunity in New Zealand

Bayleys Knight Frank is pleased to present an exceptional and rare land development investment opportunity at 65-71 Federal Street in Auckland, New Zealand’s largest city and economic powerhouse. The subject site, measuring 1,461 square metres (sqm), or approximately 15,726 square feet (sq ft), sits on the corner with Kingston Street and has recently been granted resource consent by The Environmental Protection Authority to develop into a significant 55-storey residential apartment tower with a nine-level podium. It is currently occupied by a 1980s-developed seven-storey car park building leased to Secure Parking New Zealand until April 2029, with a three-month surrender/termination clause in favour of the lessor. This lease is currently producing gross annual rental revenue of NZ$1,450,000 per annum plus GST.

Mr Ryan Johnson, Bayleys’ National Commercial and Industrial Director, said, “Under the Covid-19 Recovery (Fast Track) Consenting Act 2020, the subject site had received fast-track consent at a 29:1 plot ratio (29sqm of building to one sqm of land). This opportunity offers more than double the developable floorspace of any other approved land holding in Auckland’s Central Business District (CBD) to date. With an outstanding height of 183 metres and a sizeable gross floor area of 47,560 sqm, the consented development would be one of Auckland CBD’s tallest buildings and redefine its iconic skyline. In combination with current annual holding income in excess of NZ$1million from a carparking lease and the site’s corner position in an area undergoing significant rejuvenation, this makes it an exceptional landmark development offering. The carparking lease would also provide income while any presales or leasing commitments are secured.”

HIGHLIGHTS OF 65-71 FEDERAL STREET

• Melbourne-based developer ICD Property acquired the site located opposite Auckland’s iconic Sky Tower, in 2018 and invited five world-class architectural firms to participate in an international competition to design a landmark tower. Australian firm Woods Bagot, in partnership with New Zealand architects Peddle Thorp, won the competition and their design was used as the basis for the resource consent.
  
• Standing at 183 metres height, the consented development is a mere few metres shorter than the 187 metre Seascape apartment building currently under construction on Custom St East. But the Federal Street site’s more elevated position would make it the highest building in the CBD, excluding the Sky Tower.
• The Woods Bagot design comprises 357 one-to-three-bedroom apartments, with larger apartments targeted at owner occupiers on the upper levels, and smaller apartments suited to the investor market on the lower levels which could also potentially become part of a serviced apartment hotel operation. The lower podium levels also incorporate parking for cars, motorbikes and bicycles and a 1,000 sqm marketplace at ground level designed to connect with the street. It would serve as a community space that encompasses everything from vendors selling local produce through to eateries and bars.
• The Federal Street precinct has been identified in the City Centre Masterplan as part of a pedestrian priority laneway network connecting city centre destinations and character precincts. It is receiving major upgrades to improve walkability and promote pedestrian traffic. The current shared laneway alongside the Sky City casino is likely to be extended all the way along Federal Street to St Patricks Square.
• The property is located equidistant from the waterfront, Britomart transport centre and the Aotea civic, arts and entertainment area. Surrounded by some of Auckland’s best dining and shopping spots, the site will likely benefit from the area’s continued revitalisation initiatives. For example, there is a number of nearby hotel and residential developments on Albert and Hobson streets, the Sky City convention centre and the City Rail Link.

Mr Matt Khoo, Managing Director, ICD Property, shared, “We have decided to offer this incredible investment opportunity to investors due to timing of other acquisition opportunities back home in Australia. We are very proud of what has been achieved through the design and consent process, involving extensive consultation with Auckland Council and mana whenua. We believe this has produced an industry-leading, very aspirational project for Auckland that unlocks the full potential of this site and connects it with the city’s past, present and future.”

“In the process of doing this, we have also built a very strong support team of leading architects, engineers, urban landscapers and other service providers. Extensive work has also been undertaken on interior design and pricing for the apartments. We would be pleased to assist the next owner in whatever way we can, should they wish to proceed with this project. While much of the hard work has already been done in terms of preconstruction planning and design and obtaining a very favourable resource consent, the significant medium-term holding income provides additional flexibility to investigate other ways of adding further value to the property. This could include considering incorporating other uses permitted under the City Centre zoning such as office or hotel accommodation.”

Mr David Bayley, Bayley’s Executive Director added, “This listing is expected to attract strong offshore interest considering its rarity and unrivalled development value. There has been a noticeable increase in Southeast Asian investment interest in New Zealand in recent months. This is principally being driven by the reopening of our borders. There is only so much due diligence that can be done sitting at a commuter screen. Potential purchasers generally want to visit the site and get a feel for the area that its located in. The significant recent fall in our exchange rate against most currencies is also helping stimulate offshore interest, particularly out of Singapore but also from the United States and Australia."

Mr Daniel Ding, Head of Capital Markets (Land & Building, International Real Estate & Industrial), Knight Frank Singapore, commented, “Rare and attractive investment opportunities in New Zealand like these have typically been popular due to the country’s mature real estate market, reliable market data, fair transaction process and strict regulations. In addition, the relatively laxed foreign restrictions have allowed investors to acquire grade-A assets with ease. As such, we anticipate keen interest for this listing.”

65-71 Federal Street, Auckland is being marketed for sale by International Expressions of Interest closing at 4pm on Thursday 8th December 2022 NZST (unless sold prior).

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