24 minute read
Cover story: Howthey spent it
A $3 .8 B h ou si ng gr ab b y t he su pe r w ea lt hy
In the last two years the number of $5m-plus sales in New Zealand tripled as the country’s superrich set out to bag a better trophy home.
Advertisement
CATHERINE MASTERS
reports on a luxury housing market that seems to be immune to the price pressures being felt elsewhere. There is more wealth in the upper price bracket of the residential market than ever before in New Zealand, say those dealing in $10 millionplus sales.
Agents are seeing that wealth displayed across people with businesses which have done well out of the Covid pandemic to those who have seen massive equity gains in their existing properties as prices boomed over the last 24 months.
While the middle and bo om are now struggling from pressures such as rising interest rates and inflation, the top of the market appears to be swimming along as people with that amount of wealth are largely immune.
What agents on the ground are seeing is backed up by new OneRoof statistics from its data partner Valocity which has tracked high-end transactions.
Between 2015 and 2019, the annual average number of residential properties selling for $5m and above was 100, while the annual average number of $10m-plus sales was 11. By 2020, the number of $5m-plus sales hit 211, 16 of which were in the $10m-plus bracket. The total value of sales in the $5m-plus bracket for 2020 was $1,413,846,992 – almost double the total amount spent on top-end properties in 2019.
The top end did even be er in 2021, with the number of $5m-plus sales jumping 51% to 334 and the number of $10m-plus sales reaching 32. The amount spent in the top price bracket was a whopping $2,353,581,301, but still only 0.3% of Kiwis’ total spend on residential real estate in 2021.
The bulk of high-end sales were in Auckland, followed by Queenstown, with others trending around coastal areas, such as Mt Maunganui and Papamoa in Tauranga.
OneRoof spoke to a range of people involved in the industry and key themes emerged, including: • The growing wealth divide between the top and the middle/bo om. • Suburbs and coastal locations favoured by the wealthy tend not to change as these areas are seen as a safe and solid investment. • $10m does not buy as luxurious a home as it did a year or two ago, with entry level to some locations now si ing at around the $5m mark. • More top-end homes are going to auction. • Many wealthy people are savvy business entrepreneurs but are not household names, preferring to fly under the radar, and the new wealth being seen includes a growing number of younger Kiwis.
Chris Farhi, head of insights at Bayleys, which has a partnership with global real estate business Knight Frank, says New Zealand was flagged in the latest Knight Frank Wealth Report as having the highest expected rate of growth in the world for Ultra High Net Worth Individuals (UHNWI) – the standard definition of a UHNWI is $US30m, which is about $NZ45.7m.
“One of the big themes that popped out of the Wealth Report this year was that the wealthy have go en even wealthier during Covid,” says Farhi.
Agents who spoke to OneRoof repeatedly expressed amazement at the amount of wealth in New Zealand.
They say while there are plenty of buyers out there in the $10m-plus category it’s a competitive market in part due to the lack of stock in this price range.
Growing wealth gap
Brad Olsen, a principal economist and director for Infometrics, worries about the growing wealth divide in this country as demonstrated by statistics such as OneRoof’s.
He thinks the wealth that is apparent in the residential real estate market is down in part to the redirection of money from those who have found themselves in a more affluent position.
The wealth itself is not a surprise as there has been a shift upwards at the top end given the sheer magnitude of money which moved into the housing market after the arrival of Covid, he says.
The Reserve Bank puts the total value of housing in this country at $1.5 trillion which even Olsen says is a number with so many zeroes it’s hard to get your head around.
“The fact there is such an apparent market of the $5 million to $10 million both surprises me and doesn’t at this point,” he says.
What it does highlight is how well some businesses and entities have done in recent times.
Olsen says the flight to property at the high end is unlikely to change anytime soon given the return on stocks and investments have been variable to downbeat.
The wealth gap is concerning, he says, especially with research showing 14% of parents are having to help their children into a home with most of those children unlikely to be able to pay them back.
Among agents seeing that divide in action is the Wall family from Wall Real Estate, which consists of father Graham and sons Andrew and Ollie, who are behind many of the country’s top end sales and who hold various price records – the $38.5m paid for former Hanover Finance director Mark Hotchin’s house in Orakei, Auckland in 2013 has yet to be beaten.
– JAMES WILSON, VALOCITY DIRECTOR OF VALUATIONS
GETTY IMAGES / BETH WALSH
Wall Real Estate recently surpassed $1bn in sales for the last five years, and has had big recent sales, such as 21 Upland Road in Remuera which fetched $11.6m ($2m over CV) and 288 Remuera Road which sold for $29m, last year’s top residential price.
Andrew Wall says the offers keep coming, and these big prices are signs the wealthy believe property is the best place to invest their money, particularly in unstable times.
“You need to invest it in the dirt we’re standing on; it’s the only thing that’s solid.”
Wall talked about meeting the occasional Covid millionaire: “I met a guy who made a lot of money in face masks and another guy who made a lot of money in sanitisers.
“We meet the most amazing people from all sorts of industries.”
When spoken to, Wall was about to meet with someone in the film industry and then with someone who had a kitchen business, saying, “it amazes me how wealthy these guys have become.”
Buyers in T-shirts and stubbies
Paul Neshausen, a top agent for Barfoot & Thompson in Auckland’s St Heliers, says New Zealand has a growing number of tech and other millionaires.
“Given what I see on a day-to-day basis, I think the wealthy have got wealthier. I guess you could say because of Covid but if you drilled down on that it’s probably because they had a strategy for their business during Covid.”
He has clients who have seen their wealth double, and some are younger, he says.
“The wealthy set has changed from 60s-plus to 40s-plus. You can’t judge a book by its cover, man.
“They look too young to be able to afford a house that I’m selling, whereas in fact they end up being the buyer.”
Michael Boulgaris, who sells to the wealthy mainly around the leafy Auckland suburbs of Epsom, Remuera, St Heliers, Kohimarama, Mission Bay, Orakei and Mt Eden, says while there are more $10m buyers than ever before, that amount of money does not necessarily buy a home with a tennis court, let alone an unimpeded water view.
“Your entry level for a decent house - just entry level on less than 1000sqm, is $6m now in a good location.”
To buy a fabulous view as well, people are paying well over the $10m mark, and $10m itself is no longer a “spooky” number to mention, he says.
“Two years ago it wouldn’t be the same conversation. You’d still be looking for the elusive $10m buyer but not today.”
He has noticed a change in the wealthy, saying clients are a lot more accommodating and a entive to advice than they were a year or two ago.
“They know that cash isn’t a thing so they don’t rule the market saying ‘I’m a $10m cash buyer’. They don’t have the power they used to have.”
Covid has also relaxed top-end buyers in other ways.
“People turn up today in stubbies and shorts and
The finest countr yside living in the Waikato
In the world of real estate, connections sit at the heart of successful outcomes. Usually that means an agent’s connection with people - matching buyers with properties to find that dream home. In the case of this Matamata lifestyle development however, connections delve far deeper. Highgrove reflects the culmination of years of planning and painstaking attention to detail preparing Highgrove to the standard that has been achieved. This development celebrates a chain of connections that led to a collaboration of likeminded people. It began in 2019 when Auckland-based developer Roger Coutts received a call from his real estate niece in Matamata, with a piece of land she thought Roger might be interested in. “My wife is from a Matamata family who have been farming in the area for over 100 years, with her brother Murray Wilson still farming there, so it was good to do a development in a familiar area.” Sitting on the outskirts of town, the site was perfect – flat land, amazing established trees, a quiet road – just far enough from town, yet handy to everything. Then the neighbouring property came up for sale – disappointingly snapped up by another buyer. Until Roger learned who the new owners were. As it turned out – local brothers Hayden and Shaun Begovich of Begovich Builders’ renown. The connections continued when Roger discovered the new road into both blocks was to run down the shared boundary. Discussions were had, friendships were made and new trails blazed as a joint venture was formed. “The stars aligned as we worked through the details and found both brothers had similar business ethics and the same vision to create the finest lifestyle development in Waikato. ” Highgrove’s concept was born. Taking its cue from the towering English trees already in place, a nursery was established to tend the vast number of trees that were bought as the land was developed. More than 500 were sourced around the North Island, mostly deciduous and all over three metres. As development progressed, more trees were purchased, including many in-ground trees over six metres that were shifted on to the site. There are now over 1000 trees, 3000 hedging plants and ground cover planted throughout the 16-hectare development. It’s an impressive landscape; carefully positioned to frame each site, personalise cul-de-sacs and create a foundation for the distinction of homes that will follow. Meticulously planted and maintained, a full-time team has nurtured Highgrove to this point, ably led by Chris Frost a long time friend and business partner of Rogers. Two deep bores were established – initially to maintain the nursery, then to provide reticulated water to each lot. Not all the trees are deciduous. While Highgrove derived its name from the existing English trees, the two new culde-sacs reflect their personal plantings. Orchard Place has apple, plum and citrus trees. Olive Place has significant olive plantings. The scale of plantings and underground service preparation far exceeds any normal development.
Peter Begovich Rural / Lifestyle Specialist & Auctioneer 07 888 5677 027 476 5787 peter.begovich@ljhooker.co.nz There are liquidambars, flowering cherries, oaks, London planes, copper beech, horse chestnuts, tupelos and magnolias. Spring will be ablaze with blossoms. Autumn will match Matamata’s magnificent rustic hues. Each resident will also be invited to plant their own trees – in keeping with the covenants and quest for Highgrove and its future. Eventually, Highgrove will become almost a private arboretum. Experience shows that property values benefit as trees mature and grounds become established. “The vision that stonework and trees would be the main features, meant us going to various quarries to find the right rock initially, with no success,” says Hayden. “Then our stonemason came up with Te Mata stone from Raglan. This has a stunning earth tone. Melded with the Hinuera stone place name inserts, the result is perfection.” Shaun agrees. “This level of detail extends to every aspect within the development.” Having developed successful projects around New Zealand, Roger and his wife have a special affinity with Highgrove, thanks to their family connection. As builders and locals, Hayden and Shaun share this empathy. Both take pride in creating homes that cherish nature and are already looking ahead to building here. The initial release is just six lots – marketed by Matamata LJ Hooker’s Peter Begovich and Rex Butterworth. As Peter just happens to be Hayden and Shaun’s father, the connections continue. Highgrove’s next chapter has already begun.
Rex Butterworth Rural / Lifestyle Specialist 07 888 5677 021 348 276 rex.butterworth@ljhooker.co.nz
T-shirts. Since Covid lockdown, the last two years, people don’t wear suits much anymore.
The Covid factor
James Wilson, head of valuation for Valocity, says properties that sell in the $5m and $10m price range are no longer top echelon homes in places like Remuera and Herne Bay.
While still buying a nice home, he says, “they are not your clifftop mansion that once upon a time $5m properties would have been in New Zealand.
Analysis of the Valocity data shows buyers of $10m homes are generally people capitalising on equity gains who are trading up, Wilson says.
Wilson says the data reveals no surprises in the top towns or the top streets - Victoria Avenue and Arney Road in Remuera and Argyle Street in Herne Bay, both of which are pricey Auckland suburbs.
But Boulgaris says change is coming to wealthy suburbs and not from a market collapse at the top end.
Rather, the change is coming from the Government’s intensification plans, such as the allowing of apartment towers to be built near train and transport hubs, and also because of the controversial Housing Supply Bill, a Labour/National housing accord which paves the way for three homes of up to three storeys to be built on most sites without the need for resource consent.
This could result in the “rape of Remuera” and other suburbs, says Boulgaris.
“You imagine around Remuera Road or somewhere like that where there are expensive homes and big homes with a tennis court. There will be a lot of fear now.
Neighbourhoods under pressure
Gary Wallace, a top agent with Bayleys Remuera, is also concerned about the impact of intensification.
He puts the entry point in Remuera at $5m now but says the suburb could become a bit more affordable over time if large character homes are allowed to be demolished to make way for development.
This would be an assault on people’s property rights, he says, with values affected by potentially ugly developments over the fence.
Wallace says he understands the need for affordable housing but objects to the lack of planning, and says buyers are voicing concern.
“People will say, ‘it’s a lovely spot - that’s a nice home next door, what could be built there?’
Some buyers won’t even engage, he says: “They’ll go somewhere else. They’ll say ‘why would I want to live next door to that’.”In another change, as house prices have skyrocketed, more pricey homes are heading to auction rooms.
Murray Smith, auctioneer with Barfoot & Thompson, says 10 years ago $2m or $3m homes were considered high end and were not generally taken to auction, but that has changed.
He expects $10m homes will be seen in auction rooms, too.
Smith sold a Maungakiekie Avenue property in Greenlane at auction for $9.9m a li le over a year ago, a sum understood to still be the auction record for a residential home.
Another property, in Arney Road, Remuera, sold for $8m under the hammer in 2020, defying the $6m expectations.
Why wouldn’t you bring expensive properties to auction, Smith asks.
Bayleys national auction manager Connor Pa on also says it’s no longer uncommon to see $5m-plus properties up for auction.
BAGHURST TED
- MICHAEL BOULGARIS, BOULGARIS REALTY
FIONA GOODALL
– GARY WALLACE, BAYLEYS The market outside Auckland
Outside of Auckland, Queenstown is the main hub for wealthy buyers, although more $5m sales are being seen in Tauranga.
Stephen Shale, who auctions for Bayleys in the Bay of Plenty, Waikato and Taranaki, says there aren’t wealthy suburbs in these locations so much as the rule that the nearer to water a property, the higher the price.
In the Waikato, that means near the river, or Raglan and the Coromandel beaches.
In the Bay of Plenty, it’s Mt Maunganui and Papamoa or the inner Tauranga Harbour, and in Rotorua it’s by the lakes.
“We don’t have a Remuera as such in Hamilton because you can be in one suburb on the water at the river and you could be 200 metres back in the same suburb but your price is dramatically different.”
In Wellington, $5m sales have increased in suburbs like Mt Victoria, Kelburn, Wadestown, Roseneath and Oriental Bay, but there aren’t many properties for sale at that price in the Capital, says Antonia Brown, sales manager of Harcourts Wellington City.
She wasn’t sure why there weren’t more $10m homes in Wellington, saying there are people who can afford them, but she thinks perhaps the steep topography could be part of the reason.
A new trend in Wellington is the emergence of luxury apartments around the inner-harbour which can fetch $4m and $5m and are popular with older people who have money.
“They don’t want windy, draughty, three-storey villas up a steep hill any more. There are a lot of hills, a lot of sloping gardens, a lot of stairs and a lot of highmaintenance old wooden houses.”
Brown also says Wellington’s big buyers are not flashy people: “When they come and sit in your auction rooms you know who they are and they’re si ing there in their corduroys and their woolly jersey and they own half of Wellington.”
She thinks rather than put all their money into a great big home, wealthy Wellingtonians are more likely to buy another home in Martinborough as well, or on the Kapiti Coast, or Queenstown.
International interest
In Christchurch, Cameron Bailey, a top agent with Harcourts Papanui, says $10m sales are non-existent, though there are properties of that ilk out there.
High end starts at about $4m in suburbs like Fendalton and Merivale and sales are usually to local buyers, he says.
Fendalton is the “Remuera of Christchurch” because of its larger land parcels: “It all starts with the land and the land we’re selling in Christchurch at the moment in the good areas is over $2000 a square metre.”
Queenstown, with its snow-capped mountains and stunning lakes, continues to a ract big spenders with Mark Harris, of New Zealand Sotheby’s International Realty, reporting sales of $15m and $23m to Kiwis and Australians.
“I think we did five of the top 10 last year and probably half of them were Aussies; Sydney and Melbourne.”
Ross Hawkins, a top salesperson for Ray White, Black Group Realty Ltd, also sells in Queenstown and elsewhere, and expects to see more Australians with the country opening back up.
They want to get away from bush fires and 40-degree heat, he says, and he expects wealthy Australians may be among those a racted to a new form of shared ownership called fractional ownership, something he says has been seen more in Europe and other parts of the world than New Zealand.
Unlike timeshares, fractional ownership gives buyers a share of a luxury property as a transferable title which they can sell.
Hawkins is working with a developer on a $30m off the plan property, Parore, offering eight shares for $3.75m each and he says there’s plenty of inquiry.
He thinks fractional ownership will be popular because in Queenstown there are many expensive homes that sit empty for most of the year.
“A lot of these wealthy people are pre y smart with their money,” he says.
“You’d be be er to have shares in four different houses in different parts of the world rather than having it all in one house in one place.”
ALTOGETHER SOLD
BY THE BIDWELLS
As the agent who has conducted many of the Shore's top sales, including the highest ever sales in Cheltenham and Stanley Point, Victoria is the person you will want to talk to if you are thinking of selling your home. The Bidwells' continue to be leaders in the North Shore waterfront and luxury market.
If you are thinking of selling and would like expert advice about achieving the best result in this market, please call Victoria.
Victoria Bidwell
Residential and Waterfront Specialist
Number One Agent Bayleys Takapuna for 17 years "Top Achiever" for Bayleys New Zealand wide for 15 years International Property Awards - Best Residential Marketing Winner, Bayleys National Waterfront Marketing Award
Auckland’s waterfront and premium home specialist
PENE MILNE + 64 21 919 940 • pene.milne@nzsir.com
J US T L IS TE D
S u b - Pe n th o us e X XX II Sh el ly Be a c h
Set for Spring 2022 completion, this building of 10 apartments is designed by Paul Brown Architects for elegant living in a premium location. 3B has 158 sq m of living and 35 sq m outdoor terrace, surround balconies maximising sun and views to the north and west across the harbour, bridge, and city Featuring Poggenpohl & Miele kitchen with oversized scullery, three bedrooms, main ensuite and WIR, two car garaging, wide plank timber flooring, and finished in beautiful natural tones and central ducted heating. Walk to and from Herne Bay and Ponsonby Villages, Westhaven and Downtown for a highly desirable lifestyle. Call to view onsite and see in person the views and position ahead of completion. 3 2 S H E L LY BE A C H R OA D , S T M A RY S B AY
3 2 2 Floor Area: 193 sq m (approx.)
T he Pe n t h o u s e - Fo l l ow th e S u n
Astounding panoramic 270 degree views embrace this magnificent 11th floor sub-penthouse projecting out to Auckland’s waterfront and the Gulf. Accessed by private entry, the ultra-luxurious, bespoke three bedroom apartment with two bathrooms is one of Auckland’s finest. Voluminous living and dining areas are complemented by a media room and the master suite is lavish. Offering a walkable lifestyle with eateries, the ASB Theatre and the CBD so close. For a no-compromise waterfront lifestyle with the best views in the world. Don’t wait. 1 1 0 1 / 70 DA L DY ST R E E T, W Y N YA R D Q UA R T E R 3 2 2 Floor Area: 225 sq m (approx.) View: nzsothebysrealty.com/NZE11543 Call to View. Set Date Sale: 4:00 p.m. Tuesday 28 June 2022 (unless sold prior)
J US T L IS TE D
Prime North East Corner
3 9 0 3 / 10 CO M M E R C E S TR E E T, AU CK L A N D C E N T R A L
Wake each day to a spectacular harbour view and cityscape. This apartment holds an incredible position in the award-winning Pacifica and you will experience the quality of city living in Britomart with an easy walk to the waterfront, Viaduct precincts and catch the ferry to Waiheke for the weekend escape. Enjoying a prized north-east corner position, the home has all new timber flooring, creating a larger open living area to the views.
Heartland Herne Bay
7/9 7 J ER VO IS RO AD, H E R N E B AY
The panoramic 270 degree views are amongst the best in Auckland that you will never tire of from the Shangri-La Apartments in the heart of Herne Bay. From here, the walkable lifestyle includes the convenience of the Village, Ponsonby and the CBD. After a significant upgrade of the grounds, play a game of tennis or relax by the pool.
