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Cover story: The Rich List
THE PROPERTY RICH LIST: COVER STORY
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Despite rising prices, New Zealand’s luxury housing market is still quite small. But if there were no foreign buyer ban, say agents, Kiwi houses would sell for $40m-plus. CATHERINE MASTERS reports.
Even before the onset of the Covid crisis, New Zealand had a global reputation as a bolthole for billionaires, with the likes of Avatar director James Cameron and tech guru Peter Thiel buying up Kiwi beauty spots.
When the pandemic struck there was a rash of stories about the rich and mega-rich flooding real estate sites looking for luxury Kiwi homes, and just this month the Government announced new measures to a ract rich investors.
But surprisingly, the majority of New Zealand’s high-end homes are bought by Kiwis. And, despite our enduring fascination with luxury real estate, the top end
Titanic director James Cameron and his wife Suzy Amis own a slice of New Zealand.
Photo / Getty Images of the housing market in New Zealand is miniscule.
A OneRoof investigation into the more than 2.2 million residential property exchanges since 2000, found that $10 million-plus sales numbered li le more than 100 - 0.004% of the entire market.
And sales in the $5m to $9.99m price bracket numbered just over 1000, or 0.04% of the overall market. Some of the agents OneRoof spoke to say that the reason for the small number of big sales is that New Zealand just doesn’t have the stock in those top price brackets.
Homes that would sell for those prices either don’t exist, as in they haven’t been built yet, or are owned by people who don’t want to sell because they would then have to search high and low to find something similar.
The agents, however, say that if luxury homes were available or were built on spec by developers, they would sell fast because there are plenty of people queuing up to buy them.
This reflects the fact that there are a lot more wealthy Kiwis in the country than there used to be, they say.
A recent New Zealand Herald report backs this up: the number of ultra-rich Kiwis has nearly doubled since 2015 with 390 people now worth $50m or more and that high wealth individuals and associates numbered 12,537 in the 2019 tax year, up from 7009 in the 2013 tax year.
OneRoof data shows the price bands which have seen the biggest increase in sales over the last 20 years are in the $1m-$2m and $2m-$3m price bands, though agents who work in Auckland’s exclusive Eastern Bays suburbs say $5m sales for a “standard” home are now common, especially since the sharp spike in prices post-lockdown.
While many the New Zealanders struggling to get onto the property market may feel faint at the thought of paying $5m, let alone $10m or $20m or more, these prices pale in comparison to the luxury markets in big cities overseas. You could call New Zealand a li le on the cheap side.
In the United Kingdom, for example, the richest street is Kensington Palace Gardens, in London, where the average property price is more than $70 million.
New Zealand’s biggest residential sale, $38.5m for former finance director Mark Hotchin’s mansion in Auckland’s Orakei, is yet to be eclipsed even though that record was set around eight years ago.
Agents say this record is bound to be broken, as there are homes worth the same or more out there, but their view is that on the whole New Zealand simply does not have the pool of palatial homes and apartments that meet the international standards required by the extremely wealthy, who want eight bedrooms, eight bathrooms, eight car garaging and a spa and helipad.
However, OneRoof’s examination of the top 500 residential sales since 2000 shows there is another big difference between New Zealand’s prestige market and others around the world. In New Zealand, big sales have a lot to do with land and location and li le to do with the quality of the house.
Other findings from OneRoof’s investigation include: ● Auckland is New Zealand’s prestige capital, accounting for 440 spots on the list;
Queenstown claims 28, Christchurch 6 and
Wellington 2. ● Auckland’s double grammar zone heartland - Remuera is the suburb with the most big sales (122), followed by waterfront Herne Bay (49) and St Heliers (25). ● Beachfront properties do not dominate the list but are a big driver of sales in suburbs where beachfront is available. ● The median land size of residential properties that have sold for $10m is close to 2500sqm while the
Waterfront Herne Bay, in Auckland is home to some of the most expensive homes in New Zealand.The suburb has a median property value of more than $3 million.
Photo / Chris Tarpey
median floor area is just under 600sqm. ● New Zealand’s apartment market is underdeveloped compared to other global real estate markets, with few apartments able to command $10m-plus. ● No one at the top end of the market is buying for capital growth with very few of the luxury properties on the list seeing big capital growth in the last two cycles. ● New Zealand is unlikely to see a residential sale of $50m-plus any time soon, with less than half a dozen residential properties sporting ratings valuations of more than $30m.
Agents tell OneRoof they have waiting lists of clients with $10m or more to spend on homes in Auckland’s top value suburbs of Remuera, Herne Bay, St Heliers and Takapuna. They tend to go door-knocking to find their clients a property but often come away emptyhanded as owners don’t want to sell.
Nearly all the agents OneRoof spoke to claim that lifting the foreign buyer ban might change things because the more astronomical offers that could be made by overseas buyers might tempt current owners.
On the other hand, some agents say there is a lot more money in Kiwi hands than there used to be and that the problem in Auckland is lack of stock, explaining that there are few landholdings left in Auckland to warrant prices of $50m or more.
“There’s a lot of demand for $10m to $20m houses but the stock is limited,” says Barfoot & Thompson agent Paul Neshausen, who sells in Auckland’s Eastern Bays.
Neshausen says people call him regularly saying they have a budget of up to $20m and give him their requirements but owners don’t want to sell.
“There’s a ton of people with that much money who are New Zealand residents and there is a ton of people who want to move here but there’s nothing for them to buy.
“They either end up buying an interim home or they have to buy acreage up north in the Bay of Islands, or Queenstown, but for those city slickers that want that Auckland pad, the pickings are thin.
“The challenge I think for New Zealand homes is they’re not up to international standards. I look at a lot of US homes and not only are they quality builds but they’re large - seven bedrooms and seven bathrooms, gym, sauna, swimming pool, tennis court, five-car garaging. There’s just nothing [like that in New Zealand] so [buyers] end up with an average home, although I say average in inverted commas because we’re still talking big money but they’re paying for the land, not the house.”
Sometimes buyers get rid of the existing house but mostly they spend a lot of money upgrading it to luxury standards. Some individuals acquire several properties to make one super one, such as home-grown billionaire Graeme Hart.
Neshausen says there is a gap in the market for developers to do just that – “buy two or three houses together, bowl them and build a $20m home”.
“I think as soon as someone starts doing that they’ll quickly realise there are more buyers than they think,” he says.
Neshausen isn’t aware of anything in Auckland that could readily break the Hotchin mansion record, and says it’s challenging to find anything in the $20m-plus range outside of Auckland’s blue chip suburbs.
Neshausen believes if there were no foreign buyer ban, there would be $40m-plus
Mansions on Paritai Drive, in Orakei, Auckland, have some of the best views in the city.
Photo / Chris Tarpey sales. “The Chinese and Americans want to live here and they’ve got more money,” he says.
Ross Hawkins, from Ray White Epsom, agrees.
“I’ve got overseas buyers who don’t have citizenship in Singapore or Australia but want to come here with $15m-$20m and buy something,” he says.
“Now, it makes total sense to let people that are investing that sort of money in our economy come because we need those funds to get through and out the other side of the pandemic.
While the Government hasn’t flagged any changes to its 2018 legislation governing property sales to overseas buyers, it announced before the Budget that it is targeting wealthy investors.
Tourism minister Stuart Nash said new measures would allow more than 200 wealthy international investors to come to New Zealand over the next 12 months.
Hawkins says any suggestion that foreign buyers would shut out locals and first-home buyers is just silly because first-home buyers are never going to buy a $20m house anyway.
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He adds: “There’s definitely a market for developers to come in and build big luxury homes because not everybody has the time, the knowledge or the ability to do that, but they do want the beautiful home and they’re happy to pay for it.”
One such spec home in Auckland’s Victoria Avenue sold about a year ago for $8.6m to offshore buyers with New Zealand residency. They wanted a special place but did not want to go through the build process, Hawkins says.
Veteran agent David Rainbow, from Bayleys Remuera, says location and land are everything because buyers can always change the house.
“It’s the location they will be a racted to first,” he says.
“I’ve just listed one Remuera property which will be “They’re looking for big something else to buy. He sold marketed quietly at $10m-plus. tracts of land which can a property about three years It’s a beautiful character home accommodate a very big ago for more than $10m but it which has been held in the comfortable home, a tennis then took the sellers two more family for quite a long time, court, swimming pool, four-car years of renting before they and while there will be people garaging and space to roam.” found something suitable. who want to buy that for He adds: “It’s just amazing Mark Harris, the general where it is and what it looks how strong that end of the manager for New Zealand like – most will be after the market is and if you have the Sotheby’s International Realty, location.” right property there’s certainly in Queenstown, is not as sure
Everyone’s requirements are the money for it. of the impact of the foreign different, he says. Some want “I find the people with the buyer ban, saying a large as them but we’re certainly product is there. to be near a good school, some most money are so under the proportion of high-end buyers ge ing a lot of inquiry in that “Our Australian colleagues near the waterfront, others near radar it’s not silly. That’s how are from Australia, who like space. From Aussies, expats sold a property in Sydney’s a golf course or tennis club. they prefer to be. buyers from Singapore, exempt and buyers in the US and the Point Piper for A$100m last
“One sale I recently did in “These days you come from the ban. UK.” year, and they sold another for Judge St in Parnell, the buyer across people who have been “We saw quite a few high- While the inquiry is strong, around A$78m. Those sales was involved in importing and in a start-up and they’ve sold end transactions made by Harris also points to a scarcity don’t happen every day but he was excited to be able to sit their business for $55m or Australians last year even when factor. for the right sort of property in and watch the boats coming in something – the wealth out they couldn’t get here,” Harris “You haven’t got that many the right location, yes, I can see with all his stock.” there is just extraordinary.” says. physically on the market. It’s that happening in the future
Fellow Bayleys agent Gary Wallace recently heard “With the travel bubble, we a li le bit of a horse-and-cart here as well.” Wallace says the luxury market uxury market of one luxury property that of one luxury property tha will certainly see quite a few scenario, where they don’t Harris says if Americans has expanded rapidly in the ly in the the owners the owners we were thinking of re thinking Australians jump on planes and inquire because you haven’t could buy a bolthole here, they last decade. About five yearsfive years selling so he approached them selling so he approached the head in this direction. Brand got it, but if we did, we’d would, with Sotheby’s ge ing ago you could buy a higha high- to say he had a buyer who to say he had a buyer who New Zealand is very strong at probably sell it.” daily inquiries from people in end property in Remuera for muera for was interested but the ownerswas interested but the own the moment.” When the Hotchin record is the US. $8m; now buyers would have would have ended up selling the property ended up selling the prope If people in the US, the UK beaten, and it will be, Harris “I don’t think it’s necessarily to shell out $10m to $20m. $20m. privately for more than $20m. privately for more than $2 and Asia were allowed to buy says, the lucky house will the bunker mentality but it’s
Wallace believes that the hat the One of the reasons these One of the reasons these here, big sales would be made, either be in Auckland or the about seeing New Zealand as intensification of Aucklanduckland listings are so scarce, listings are so sc but in terms of total volume of southern lakes, although he a great place to be in terms of has made homes on he says, is that he says, is th sales they would still be small points out there is a lot of if this thing happens again, large estates of owners don’t owners don in comparison to the domestic interest from people looking to which obviously a lot of people 2000sqm-plus, such want to sellwant to se transactions, Harris says. move to regional parts of the think it could do.” as those still found up before up befor To him, properties in the $8m country, especially oceanside Having said that, there are in Remuera, more they have they to $10m bracket are the top of and lakeside. bunkers around Queenstown, valuable than ever found fo the luxury market. “We’ve certainly got he says. “There aren’t because those “There’s certainly a lot buyers capable of that sort of hundreds of them – that may looking in the more above $10m in Sydney, purchasing at the moment.” be a bit of an urban myth – but top price bracket Melbourne and New York. We Harris doesn’t rule out a there’s certainly two or three want privacy. haven’t got the same volume $100m sale, but only if the we know of.”
The mountains and untouched open spaces on offer in Queenstown are a magnet for the superwealthy.
Photo / Getty Images
US billionaire and recent Kiwi citizen Peter Thiel.
Photo / Getty Images
Bayleys agent Gary Wallace says the top end of the market has rapidly grown in the last
five years. Photo / Fiona Goodall
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