Housing shortage likely during next America's Cup.

NZ Herald 21 Jan, 2018 11:57am

Auckland is likely to face a housing shortage when it hosts the America's Cup in 2021, with up to 900 more residential units needed, according to new research.

A report by international real estate services company CBRE showed an undersupply of housing and slow central city apartment development was likely to add to pressure from the 2021 America's Cup.

With syndicate sizes of up to 1000 members as well as family and support crew, up to 900 residential dwellings are expected to be needed, the report says, with a likely preference for the Wynyard and Viaduct areas.

CBRE New Zealand head of research Zoltan Moricz said with undersupply of housing expected to continue, Auckland needed to ramp up development to be able to house these syndicates.

"CBD apartment development has slowed down during the past year. Sales and project launches have both declined and developers are facing greater challenges from rising construction costs and lack of construction capacity as well as more difficulty accessing development finance," Moricz said.

"Although more stock is needed for the Americas Cup, the supply response to growing demand in the CBD to date has been slow and what supply there has been has been met by more owner-occupiers who are less willing to rent units out than investors.

"Compare this with previous apartment cycles when 86 per cent of the total units developed between 1995 and 2007 were for rental investment purposes."

Syndicates would spend most of 2020 in Auckland in the lead up to the event, however larger syndicates were likely to base themselves there for part of 2019 as well.

Between 2014 and 2016, just 1012 new residential units were built in the city centre to meet an additional 10,000 residents in the area, the report said.

This had led to increased residential density and almost no rental vacancy in the market.

This led to increased residential densities and virtually no rental vacancy in the market.

The current pipeline of new dwellings was relatively small, Moricz said.

About 250 apartments were currently being developed in Wynyard Quarter. 164 of these were due to be completed this year with the rest due in 2020.

"Given construction, let alone marketing, timeframes, we suspect that it will be difficult to increase the pipeline of Wynyard apartment stock due for completion in mid-2020 before the America's Cup starts to the extent required to cater for demand," Moricz said.

"Under this scenario, increased pressure will be placed on the commercial accommodation market, especially the serviced apartment sector where units are more suitable for longer term stays.

"In addition, we suspect that some of the existing owner-occupier apartments will be made available for shorter term rentals and that Airbnb-style accommodation will be subject to significant demand pressure from both visitors and the sailing community."