Apartments defy pandemic
Colourful Wellington property investor Chris Parkin is promoting a $25 million 80-unit modular apartment development in downtown Wellington, called Otto, amid forecasts of falling property prices and pandemic-driven recession.
Parkin – famous in the capital for shifting the Museum Hotel two blocks on steel rollers, rail tracks and huge ball bearings in 1993 from the Wellington waterfront to its present location on the corner of Cable and Tory sts – is marketing the development, in which the key shareholders and developers are Kevin Podmore and James McArley.
Podmore, a financier and developer, was the managing director of the failed St Laurence in 2010. McArley was a director of the St Laurence Property Development Fund.
Parkin said he is a shareholder in the development company, 260 Wakefield Street Limited, but more of an investor than a developer.
He provided the site for the development which was his input into the project. In return he would get about 20 per cent of the apartments and said they would be good longterm investments and renters.
While bank economists are forecasting big falls in property values, Parkin thought residential property prices would flatten, though not fall. When the residential market was under pressure, a lot of people held on to their properties rather than sell.
‘‘I don’t think the pundits and commentators have got it right. They are underestimating the strength of Government actions to revive the economy.’’
As soon as New Zealand opened its borders to Australians, the tourism industry would start to get back on track quicker than some people thought, as Australian visitors were traditionally nearly half of our tourists. And the economy would bounce back more quickly than many were thinking as well.
‘‘I reckon it will be sorted by the end of this year. We won’t be quite back to where we were but we won’t be far short of it.’’
He applauded the steps the Government had taken so far. ‘‘I’m just worried if it will have the courage to continue that.’’
There are still plenty of hurdles for the development. The 80 onebedroom and studio apartments are 45 square metres to 55sqm in size and will be made in China. The apartment block will be assembled on the Wakefield St site and the developers intend to engage a midsized local contractor to do that.
But the modules would not be ordered until the development had made enough sales to go ahead, Parkin said. The modules would require Ministry of Business, Innovation and Employment approval as building components.
Asked what guarantees people who put deposits down on apartments or studios would get, Parkin said, ‘‘The deposits are held in trust in a lawyer’s trust account and they can’t be touched until a title is available. So until the development is finished we can’t touch any deposits at all.
‘‘There’s certain conditions we have to meet, we have to progress to a certain distance by a certain date otherwise the deposits are fully refundable with interest. It’s just like any other apartment development. It proceeds pretty much the same way.’’
The modules came with cladding and when they were put together the result looked like a building rather than a series of boxes, he said.
Total building costs were probably about $20m-$25m. The development would be funded by shareholder’s equity and bank funding. The developers would seek bank funding once a certain level of sales had been achieved.
These sorts of apartments would have been popular as Airbnb investments, though the travel and border restrictions had impacted
‘‘I don’t think the pundits and commentators have got it right. They are underestimating the strength of Government actions to revive the economy.’’
Chris Parkin
that at present but in the longer term he thought Airbnb investors were a key group for this type of development.
The development was also priced to attract first-home buyers looking to buy under $550,000 and boomers wanting a pad in town. The apartments are being sold off the plans. A Trade Me listing showed prices starting at $438,000. Construction is expected to start later in the year and finish early 2022.
There had been a lot of interest already, Parkin said. The need for housing was still strong, despite the restrictions and caution brought by the pandemic and the apartments were at the cheaper end of the market.