The city is four years into its current development cycle which commenced in early 2013. Since that time, 206
projects have been launched comprising 13,135 units. Of these, 47 projects and 2,455 units have already been
completed.
31 projects totalling 2,044 units have been abandoned over the past four years. This equates to 15 and 16
percent respectively of the total number of projects and apartments launched. This refers to projects within
CBRE’s definition of the active pipeline for apartments while other statistics quoted on abandonment may
encompass multi residential projects outside of this definition.
It is also important to define abandonment. Abandonment refers to a specific active pipeline project being
abandoned. It does not mean that development plans for the site of this project are completely abandoned.
Indeed, a number of the abandoned projects (nearly a third according to our records) have subsequently been
relaunched as another project on the same site, while several other sites on which projects were abandoned
have been recently transacted to a different developer.
This brings into focus the reasons behind project abandonment. A recent focus has been on construction costs
and financing as major contributing factors. While these play an important role in the abandonment of some
projects, other factors have also been significant contributors to projects being abandoned. These factors include
intrinsic project specific attributes boiling down to developers launching the wrong project, at the wrong place, at
the wrong price. Some project abandonments might have been down to developer skill and experience. While
construction costs and financing are contributing factors which have gained increasing focus this year, they are
two of a suite of reasons behind abandonment.
While abandonments are a major current market focus, developers continue to launch new projects. So far in
2016, 45 apartment projects comprising 2,600 units have been launched. These launches are spread throughout
Auckland and include CBD, Fringe, and Suburban locations. During this period four projects have been
abandoned.
Auckland Pipeline Apartment Units by Launch Date and Abandonments
700
600
Number of Units
500
400
300
200
100
0
Launched
Abandoned
The active market for launches this year has been underpinned by purchaser take up. CBRE’s take up data is
current to Q2 (to the end of July in our data definition). This shows healthy presales so far this year with 2016
sell down levels being well in excess of previous years. This has resulted in the volume of yet to be sold stock
falling to 1,500 units of the 8,600 unit pipeline, with most of the unsold stock found in recently launched projects
with limited market exposure to date.
Auckland Quarterly Pipeline Presales
1,200
Number of Units
1,000
800
600
400
200
0
Number of Units in Saleable Pipeline
Auckland Sold vs Unsold Apartment Units in the Saleable Pipeline
6,000
5,000
4,000
3,000
2,000
1,000
0
Presold
Unsold
Clearly, the recent publicity around project abandonments has captured the market’s imagination on the back of
emerging concerns around construction costs and changes in the banking sector. To date, the impact in terms of
actual project abandonments has been limited, but just as abandonments through these, and other, reasons have
been part of the cycle since its commencement, abandonment will continue to be an ongoing market feature
throughout the remainder of the cycle.
More pertinent discussions are to be had around how these issues are being addressed, such as the evolution of
the development funding landscape, and the increasing opportunities for larger scale, well-resourced developers
to enter the market. While affordability is viewed differently by different people and some see it as a subjective
and shifting concept, it, and its related concept of “value for money” will increasingly impact on future launches
and abandonments. The next stage in the market’s evolution in relation to project success will once again be
more related to intrinsic project specific attributes boiling down to developers launching the right project, at the
right place, at the right price.