20ha site: NZ's biggest builder wins consent for vast housing project

Author
Anne Gibson, NZ Herald,
Publish Date
Tue, 2 Feb 2021, 4:27PM
Steve Evans, Fletcher Residential chief executive. Photo / Michael Craig
Steve Evans, Fletcher Residential chief executive. Photo / Michael Craig

20ha site: NZ's biggest builder wins consent for vast housing project

Author
Anne Gibson, NZ Herald,
Publish Date
Tue, 2 Feb 2021, 4:27PM

New Zealand's biggest listed construction business has won state consent to buy rural land on Auckland's north-west fringes for a vast new housing estate.

The Overseas Investment Office said last week consent had been granted to Fletcher Building subsidiary Fletcher Residential to buy 20ha from a vendor whose name was suppressed and for an amount also suppressed.

The consent came the same month as the business sold a controversial site in Mangere for $30m after an agreement with the Government to buy the disputed Ihumātao land.

Riverhead is now a new focus for the subsidiary headed by Steve Evans.

"Fletcher Residential develops residential land and builds new dwellings. The land being acquired is about 20ha of rural land in Riverhead northwest of Auckland," the OIO said last week.

It intends to rezone the farmland for urban use to respond to the fast-growing Auckland population and features of the location, the office said.

"The construction of houses is likely to occur between five and eight years sooner with the investment due to the earlier rezoning. This is likely to advance the Government's goal of delivering more housing, quicker," the office said.

As one of this country's largest home builders, the company had made many investments which benefitted New Zealand, it noted. Fletcher Building's NZX listing also enabled New Zealanders to participate in the business, it said.

These were factors in favour of consent being granted.

Damien O'Connor, Minister for Land Information, and an Associate Finance Minister granted consent. David Parker and Megan Woods are both associate finance ministers.

Consent was necessary because the land is classified as sensitive, being large rural lots. Consent was also needed because Fletcher is classified as an overseas entity: 49 per cent Australian owned. Although listed here, only 19.9 per cent of its shareholders are kiwi. Americans hold 15 per cent and British 7 per cent.

Fletcher can buy 7ha of land on Riverhead Rd, a further 1ha in another block on the same road, about 8ha at Lathrope Rd and a further 4ha on that same road.

Lathrope Rd meets Riverhead Rd near the Old North Rd intersection.

The only information available about the vendor is that they are 100 per cent New Zealand owned.

Gregory Allan of Simpson Grierson acted for Fletcher.

Approached for comments, Fletcher refused: "It's a little too early in the development stage for this level of detail, but when we're ready to announce we're more than happy to talk to you."

Fletcher Residential has raised locals' ire after it bought 109ha of dairy farmland near Kumeu where it could build thousands of homes next to Taupaki township by 2045.

In December, The Herald reported local MP Chris Penk saying recurring haphazard development had mired Auckland's north-west in grinding traffic jams and classroom shortages.

Auckland Council also expressed concern, saying Fletcher's new land was located outside areas earmarked for future urban growth.

That risked disrupting city growth plans and piling more costs on ratepayers, it said.

Fletcher Residential lists locations where it is planning to build, building and/or selling homes all being in Auckland: Beachlands, Glen Innes, Hobsonville Point, Karaka, Ormiston Panmure, Red Beach, Stonefields, Swanson, Te Atatū Peninsula, Waiata Shores and Whenuapai.

In the year to June 30, 2020, Fletcher Residential made $466m revenue from housing development, down on the previous year's $639m. The business noted the effect of Covid and the lockdown from late March which stopped all but essential construction work.

"From March until early May, house sales were negatively impacted by the Covid-19 level 4 lockdown. The absence of sales during these important sales months, as well as delays in the completion of houses, led to 666 units being taken to profit in FY20 compared to 755 units in the prior year.

"May and June house sales activity was strong, although most of these sales will settle in the new financial year. The demand for Auckland houses in the $600,000 to $900,000 price range remains especially strong, reflecting interest from both first-time buyers and investors," the company said in its annual report.

Trading cash flow for the division was $118m compared to $95m in the prior year. Cash flow included a $50m receipt for a Wiri land development sale, according to the Fletcher Residential annual summary.