Developers hesitant while investors act to secure new builds

Property developers in Hamilton can’t afford to keep waiting for much-needed infrastructure development and are resorting to selling new builds and existing property earlier than they’d like to, according to Lodge Real Estate managing director Jeremy O’Rourke. 

O’Rourke says he is seeing new builds from property developers coming to market sooner than usual, along with existing property that developers can’t afford to sit on any longer due to the lag in infrastructure upgrades.

All of which, he says, is presenting opportunities for investors.

“The rising cost and effort of navigating council consent processes and general red tape, combined with the limitations of developing in central suburbs, is seeing developers pull back and offload stock.

Hamilton City Council data shows as many as 75,000 homes will be needed by 2043 to keep up with projected population growth, but the lack of infrastructure planning is hamstringing developers.

Property developer Grant Griffiths says the lack of wastewater capacity is a central issue for Hamilton developers.

“The big issue is the sheer lack of capacity for infill housing, which is impacting about four years of deliverable housing, because that’s about as long as it will take to fix Hamilton’s pipes.

“You’ve got a situation now where developers have paid for sections in central suburbs but they’re sitting around because we can’t put more pressure on a broken wastewater system.”

Property developer and builder Leon Da Silva, of Da Silva Builders, also says the time and cost involved in building houses in Hamilton is getting higher every year.

“A development that would have taken a year to build in 2016 would take a good six months longer now when you factor in longer consent processes and increased costs.”

Da Silva says none of that matters if you can’t get a new build’s toilet connected to the wastewater system.

“It’s one thing to get through the consent process, but now we’re dealing with the fact that we can’t even get some builds started because Hamilton’s infrastructure can’t cope with the added pressure of housing intensification.

“This is a problem for most regions in New Zealand, but in Hamilton it’s really come to the fore thanks to a lack of forward planning, and because we also work in other regions, we’ll have to focus on our builds there where the infrastructure can support the growth.”

O’Rourke says while developers work through these problems, smart investors are filling the void. 

“Our infrastructure has really shut down in-fill development. With increased demand and supply becoming limited, that’s putting pressure on rents to rise. You can also buy in the city at between 5-6% yields and investors like that. 

“So, savvy investors can see the opportunity that exists in Hamilton, they can see the potential capital growth and that they can get a good return on their money.”