NZ Super Fund, Ngai Tahu invest $113 million in Auckland housing project

Friday 18th December 2015

The New Zealand Super Fund has teamed up with Ngai Tahu’s property arm and New Ground Capital, to invest in a $113 million new housing development at Hobsonville Point – its first direct foray in the Auckland housing market.

The investors will purchase 1.95 hectares of former New Zealand Defence Force land in two lots from a Housing New Zealand subsidiary, the Hobsonville Land Co, to build 200 new homes by late 2018, they said in a statement.

NZ Super chief executive Adrian Orr had indicated in July that the fund, which is worth $30 billion, was eyeing partnership opportunities in the Auckland housing market, where migration has exacerbated a shortage of supply. But he said paying the right price in what was then a booming market was challenging along with finding the right partners.

NZ Super and Ngai Tahu will each invest 48 percent of the capital required for the development while New Ground Capital will contribute the remaining 4 percent.

About half the properties will be priced under the Auckland median house price and 30 percent will be priced at $550,000 or below under the Hobsonville Point affordable homes programme. The partners plan to retain a quarter of the houses as long-term rentals and sell the rest.

It’s the first co-investment between the fund and the iwi and fund chief investment officer Matt Whineray said the choice of partner was important with Ngai Tahu Property offering expertise and collective scale.

“They have similar investment horizons and objectives as we do and also lack the need for liquidity,” he said.

NZ Super's reference portfolio no longer includes property and its previous residential housing investment has been indirect through different property funds in New Zealand and offshore.

Whineray said it was still interested in other Auckland housing investments but there was nothing specific in the pipeline at present. Similarly, it was always keen on working with Ngai Tahu and other iwi partners on potential investment options providing they added value to the portfolio, he said.

The fund has also been eyeing buying opportunities of scale in New Zealand’s rural property market.

Ngai Tahu Property’s incoming chief executive David Kennedy said the company viewed the Hobsonville project as a perfect entry into the Auckland market and an opportunity to develop a strong partnership with the super fund.

Ngai Tahu, which has a $553 million property portfolio, is one of the largest players in the South Island property scene and has played a big part in the Christchurch rebuild.

Hobsonville Point had already proven to be a successful master planned development, Kennedy said. Ngai Tahu will be the development manager, overseeing construction of the housing project while New Ground Capital will run the rental component.

Construction on the development starts in the second quarter of next year and it will include a range of apartments, terraced housing and standalone houses.

BusinessDesk.co.nz

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