06 December 2018


Apartment developments are seeking exemptions to the new Overseas Investment Amendment Act so they can sell to overseas buyers, within weeks of the controversial legislation coming into force.

Four applications for a Transitional Exemption Certificate have been lodged with the Overseas Investment Office.

The OIO has granted this type of exemption to one of the four applicants developers, Hengyi Pacific, of the 57-storey Auckland apartment building, The Pacifica.

It is the first to receive the exemption. Three more applications for a transitional exemption certificate are being considered

OIO's Vanessa Horne, Land Information New Zealand group manager, said the office was not able to provide details of the applications while they were being considered. 

The office intended to make decisions on exemption certificate applications within 50 working days.

To be eligible for a certificate the apartment development must be at least 20 units that were not completed at 22 August 2018 and were likely to be completed by 22 August 2023.

They must have had at least one pre-sale before 22 August 2018, she said.

Overseas people could buy apartments off the plans from a development with a transitional exemption.

The certificate allowed the developer to sell up to 100 percent of the units to overseas people, and those overseas people who bought did not need consent from the OIO.

They can live in the apartments, and do not have to on sell, she said.

The certificate only applied to the first sale.  If the original overseas purchaser wanted to sell to another overseas person, the second purchaser was not able to rely on the certificate to be exempt from the need for consent.

Applications for transitional exemption certificates could be made to the OIO up until February 21, 2019, Horne said.

Large Auckland apartment developers Conrad Properties are non-committal on whether they are one of the applicants seeking exemptions.

Conrad Properties shareholder and partner Jamie Hutchens told Stuff  I'm not really at liberty to say at the moment. We are just going through some processes internally so no comment.

Leading Auckland real estate firm Barfoot & Thompson project manager Matt Baird said two developers he was working with were weighing up making applications but had not yet done so.

He preferred not to reveal which apartment developments. They were in the city or on the city fringe.

They are still making their minds up, Baird said. No one was sure of the process they had to go through.

Their considerations were whether it was worth it and whether there was overseas buyer demand for apartments.

There were many apartment developments in Auckland in the city and through the suburbs.

The Pacifica was in the inner city which had been popular with offshore buyers, so I can understand why they have pushed that through, Baird said.

If the developers saw the exemptions could generate sales he was sure they would apply.

But at the moment with the current environment I'm sure there's developers wondering whether it's worthwhile, Baird said.

Developer Paul Doole of The Antipodean, on Beach Road, near the Auckland waterfront, said he was looking into an exemption but had not yet applied. 

The Antipodean was under construction with 11 of the 15 floors built.

He had sold about 100 apartments off the plans of 164 to be built and about 15 of the sales were to overseas buyers.

The apartments ranged from studios to three bedrooms and prices ranged from $400,000 for a studio to $1 million plus for two bedrooms.

CBRE is marketing the 282-apartment tower The Pacifica where thirteen levels have been built and construction is expected to be completed at the end of 2020.

CBRE national director of residential projects Gavin Lloyd said The Pacifica got a transitional exemption which meant international buyers would be able to live in the apartments.

Hengyi Pacific had to pass a series of tests.

They included proving financial capability to deliver the project, that there was a social and economic benefit to New Zealand, that they were delivering much needed housing and had a track record of delivering these projects.

Hengyi, based in Melbourne, had successfully developed large-scale apartment complexes with 500-700 apartments.

The builder was Icon Construction ultimately owned by Kinjo, a Japanese construction company and the largest in the world, he said.

About 190 apartments at The Pacifica had been sold off the plans, mostly to New Zealand owner-occupiers, Lloyd said.

About 6 per cent had been sold to overseas people, and they included expat Kiwis and about 4 per cent were mainland Chinese buyers who bought before the legislation came into effect in October.

For us it was more a tick in the box that the Government had seen fit to support it, Lloyd said.

The prices for the one to three bedroom apartments started at $650,000 and went to $35 million for the super penthouse covering the two top floors.

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