$50m Parnell land splurge brings fine
Malaysian firm penalised $70,000 for failing to seek OIO consent
A Malaysian company that splurged $50 million on a large parcel of development-ripe Auckland land in blue-chip Parnell Rd has been fined $70,000 for failing to seek Overseas Investment Office (OIO) consent.
A Weekend Herald investigation into the whirlwind buy-ups in 2021 has also revealed plans for about 170 terraced apartments on land bordering Domain Drive at the entrance to Auckland Domain, plus a 67-apartment development on an $8m Ellerslie site.
The OIO says the applicant is creating a new “modular construction division” to install prefabricated residential dwellings, helping to boost New Zealand’s housing supply.
The Auckland Council is yet to receive a resource consent application for the Parnell development, but the company said the project is in the planning and design phase with construction due to start mid-next year.
Documents released to the Weekend Herald under the Official Information Act show 104 Dixon Street Ltd (DSL) is a subsidiary of Malaysian firm Dialog Group Berhad.
Between March and July 2021, DSL or its nominees purchased seven Auckland properties for a combined $58m.
The properties included a sizeable parcel of land at 491, 493, 501 and 509 Parnell Rd collectively worth about $17m which are now owned by Dialog subsidiary Parnell Park Development.
They also include a huge neighbouring 10,500sq m site at 1 Domain Drive purchased by another subsidiary company, Domain Gardens Development, in June 2021 for $33m.
In addition to the Parnell properties, another subsidiary company, 576 GSR Development, bought a parcel of land at 576-580 Great South Rd and 5, 7 and 7A Main Highway in Ellerslie for $8m. Seven three-storey blocks comprising 67 terraced apartments have been granted resource consent for the site.
Five of the seven purchases were later deemed to have breached the Overseas Investment Act because they needed OIO consent as the properties were residential and therefore classed as sensitive land.
The documents say DSL did not seek professional advice around its
foreign investment obligations and did not apply to the watchdog for consent. The company had mistakenly relied on the council zoning classification when assessing the residential land sensitivity, rather than the property classification.
DSL self-reported the breaches in July 2021 and co-operated with investigators, delaying settlement while inquiries were carried out and later applying for retrospective consent through its nominees for the five
offending transactions. The OIO ruled the breaches were inadvertent and granted the retrospective applications.
“We had some concerns whether or not the representative of DSL/ Dialog was reckless regarding the possibility of land being residential land,” a November 2021 OIO memorandum says.
“However, we do not consider that DSL or its representative have tried to disguise their behaviour or reasons
for their error. We were ultimately satisfied that it was an honest mistake.”
The consent decisions show the Malaysian company plans to build 140 residential dwellings on the Domain Drive site in a three-stage development to replace the current 91-bed, long-term accommodation facility.
It also plans at least 30 new apartments at the site next door which will replace six existing flats, some of which are used for student accommodation.
Subsidiary company Dialog Property NZ told the Weekend Herald it worked quickly to rectify the error once it was identified.
“DPNZ immediately and proactively self-reported to OIO and worked quickly and collaboratively with OIO to resolve the matter.
“DPNZ has since obtained retrospective approval for the land purchases and is moving forward positively to deliver quality and affordable homes for New Zealanders. DPNZ appreciates the OIO’s understanding in this matter and is pleased it has been resolved transparently and to the satisfaction of all parties.”
Planning work was under way for the Parnell development with construction on its first multi-unit terraced project tipped to begin in mid-2024.
Planning applications were yet to be lodged for the Parnell project but resource consent had been granted for a medium-density residential development in Ellerslie, the company said.
Parnell Business Association general manager Cheryl Adamson said she was unaware of the planned 170-apartment development.
In principle, the association would support intensification provided it was in keeping with other developments in the area.
Waitemata¯ Local Board member and heritage spokesman Allan Matson said he was concerned about the “quality and amenity” of housing developments in the area, which often had little safeguards or controls.
He had not heard about the Parnell Rd proposal but said the board would now seek information about the company’s development plan to assess its suitability.