$ 200m Milford apartment project stalls
High bank borrowing costs, falling house prices, low pre- sales and delays getting contract building prices have prompted NZ Retail Property Group to stall its $ 200 million The Milford apartment and shopping project on the North Shore.
Sara Johnson, NZ Retail Property Group ( NZRPG) marketing and communications general manager, said a combination of factors prompted the business to delay work building the 115 apartment units and 20 new shops.
NZRPG said it would not begin work at the site this year and had repaid all deposits on apartments, but would review the situation around March.
“In terms of the traditional channels of the Australian- based banks, there was a lot more discussions about borrowing the money than there would have been a couple of years ago,” she said of NZRPG’s trouble funding the big project.
“It’s not to say they were not going to lend. But was it the best thing for the business? Not necessarily. Interest rates were higher,” Johnson said.
“There’s nervousness in terms of the real estate market,” she said, revealing that deposits were taken on only 18 of the 115 units, amounting to sales of $ 50m of property, including the $ 6m penthouse.
“We also had delays with the guaranteed maximum price contract with all the construction businesses. It’s a big development. It was getting that fixed pricing over a period of time. As all the pricing came in, we were getting closer and closer to Christmas and we would have been starting early September, then October,” she said.
“And actually we are a retail centre owner first and foremost, so we will focus on the retail during the Christmas period and take another look at the project in March next year.”
Debbie Dunsford, co- chair of the Milford Residents Association, which opposed the plans, was philosophical about the project delay. “I guess it will happen at some point. Nobody has said, ‘ I’m really sorry it’s not going to be built’. We’ve heard them talking about it for March or April next year. The main question is are they proceeding with the mall extension? It’s nice to have the mall doing well,” Dunsford said.
Imported Italian kitchens, a 170sq m heated outdoor pool and podium deck spreading across a third of a hectare were features of the apartments.
Last year Johnson said that prices started from $ 1.7m for a 94sq m unit on ground level with a 35sq m deck. Prices were to rise the higher up the building, she said.
Construction was to start in February this year and the first residents were to move in around mid- 2019. An apartment display suite was opened in the ex- ASB bank retail outlet in the mall, with a full- sized mock- up bedroom, kitchen, living area and bathroom.
Brett Russell’s Dominion Constructors won the contract for the enabling works beside the mall as well as the main contract to build the 11- level Milford.
Mark Gunton, NZRPG founder, planned the biggest reverse takeover on the NZX to fund his activities. But in July, his business — valued at about $ 575m — cancelled its play on listed Bethunes Investments, saying it would examine other options after the September election. NZRPG founded the huge Westgate retail centre on Auckland’s northwestern fringe. It is planning a new mall and apartment blocks at Birkenhead’s Highbury.