Investment Driving Wellington Apartment Market
Strong Investment Fundamentals Driving Wellington CBD Apartment Market
Strong investment fundamentals are driving the development of apartment blocks in the Wellington CBD and new projects which best meet the needs of investors and occupiers alike are predicted to experience good demand.
Remax of New Zealand, a leading international real estate company, says few new apartment buildings have been built in the inner city in recent years, leading to an unsatisfied demand, at the same time as interest in central city living is growing in popularity.
Spokesman Richard Adams says while only two apartment blocks with a total of 41 apartments were consented last year, many more new CBD apartments are now at various stages of development and should meet a ready market across the board.
“The market is in a more mature stage. We are seeing fewer buildings conversions and more architect designed buildings containing apartments ranging from luxury penthouses to simple and convenient ‘pied a terres’ so popular overseas as lifestyle options evolve”.
“Wellington City Council is to be congratulated for its flexible approach to apartment sizes and for placing the emphasis on design quality.
“The Council is quite right in recognising that successful apartment developments cannot be achieved by regulation alone and its approach should enable the development of apartment buildings which enhance the city and meet the needs of investors and occupiers”
Mr Adams says apartment development is driven by market demand at several levels.
“Developers need to consider what both owner-occupiers want and what investors want, which in turn is also driven by what tenants are seeking. This suggests that new apartment developments will have a range of different apartment sizes and other attributes. Quality of design, windows, natural light, outlook, and quality of the streetscape will all be factors.
“Location in regard to transport, and ability to walk to entertainment precincts, the waterfront and Lambton Quay will add appeal.
“In larger developments, communal facilities such as gyms, swimming pools. And retail will add to the appeal of inner city living and help create a valued sense of community.
Mr Adams says strong
investment fundamentals are driving the development of
apartment blocks in the Wellington CBD, and new projects
which best meet the needs of investors and occupiers alike
are predicted to experience good demand.
“There is growing demand internationally for inner city living choices, and the Council is wise to let the market decide what it wants, but to insist on quality design and construction that will stand the test of time.
“Increasingly, young people want to live where the action is, but older people are also leaving the traditional family home for a different life experience.
“There is also growing interest in Wellington from couples who want to have their principal home at the beach or in the country for weekends and holidays, and have a low maintenance apartment close to the heart of things, in which to live during the working week. These owners often want smaller apartments than those who want to use their apartment full time.
“This trend is encouraged by communications technology, which gives more and more people the flexibility to divide their time between the inner city and Wairarapa or the Kapiti Coast”.
Mr Adams said says demand for new CBD apartments will come from owner occupiers using their apartments in this way, from Wellingtonians wishing to adopt an inner city lifestyle in a modern apartment, and from investors around the country and overseas who appreciate the strong fundamentals underpinning the Wellington apartment market.
” Wellington has emerged as the most attractive city for residential apartment investment because its high rentals, high incomes and a demand for modern inner city living options which has not been adequately matched by recent development”
Mr Adams said Wellington has been transformed as a city over the last decade, with popular waterfront redevelopment, new high rise office buildings and inner city entertainment precincts making it one of the most attractive cities in which to live and invest.
“The Council has undoubtedly got things right, and there is a range of new apartment developments coming forward as a result.
Mr Adams said investors were aware of other indicators:
- New office buildings are planned or underway in Wellington, and the vacancy rate is lower than at any time since 1991.
- Wellington City grew 1.5% to June 2007 adding 2,790 people, the sixth fastest growth rate in the country out of 73 territorial local authorities.
- Economic activity and stability of rental demand in Wellington is underpinned by the continuing presence of central government and two universities.
- Wellington wage and salary earners have median incomes considerably higher than the national average, and Wellington apartment rentals are higher than Auckland’s. Twice as many Wellingtonians earn more than $100,000 pa, than the national average.