Property Insider: ‘Wind pressure’ on Seascape; Du Val estimated to owe $250m; new Ikea roof

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Auckland Council plans “floor-by-floor examination of all potential hazards” at abandoned, unfinished skyscraper Seascape; Du Val’s $250m liabilities; progress on new Ikea store; airport due to open new $200m Mānawa Bay discount outlet store next
month.

The big news in the past week in New Zealand commercial property has been the suspension of work on Auckland’s new $300 million 56-level Seascape.
The tower super-structure is up, changing the city’s skyline with a skeletal dinosaur-like appearance – but China Construction told all subcontractors to leave last week.
Auckland Deputy Mayor Desley Simpson said Auckland Council would stay in very close contact with the builders to ensure the absolute safety of the building while construction was stopped.
“This includes a floor-by-floor examination of all potential hazards, given there is considerable wind pressure on the structure and open levels,” she said.
Some in the sector expressed deep concern about the giant project. They’re also asking if the Chinese economic downturn has taken its toll on that tower: “Could this be New Zealand’s first ghost tower?” asked one person.
The giant structure has been left open and is not clad.
Work has now stopped until a resolution is reached in a dispute between the builder and developer Shundi Customs. The builder says it won an arbitration decision against the developer but the developer disputes the outcome and says it is committed to finishing the tower.
So people are worried about what is next for this skyscraper, pondering the effects of no work on a building of that size and the potentially massive negative fallout for Auckland if work doesn’t continue soon.
Some say other builders might be keen to step on to the job but nothing has been announced yet.
Others are asking if China’s housing woes are spreading to this country, particularly the tower.
In May, Herald business editor at large Liam Dann noted comments on China by Hong Kong-based ANZ China economist Raymond Yeung to the China Business Summit 2024.
The property sector remained the biggest problem for the Chinese economy, Yeung said then.
As well as having a direct impact on demand for building products, the shakey sector has undermined consumer confidence.
Shundi Customs was able to sell Seascape apartments to Chinese residents – something that normally wouldn’t be allowed after the Government late last decade brought New Zealand into line with other countries, banning the sale of residential properties to foreigners except Australians and Singaporeans.
The Overseas Investment Office said: “Shundi Customs is constructing a high-rise apartment building in the Auckland CBD, consisting of 221 residential units. Shundi was granted its transitional exemption certificate on April 15, 2019.”
Shundi Tamaki Village also won an exemption to sell apartments to foreigners at its 10 multi-storey buildings for 763 units at 261 Morrin Rd, St Johns, Auckland, Land Information New Zealand (Linz) said.
Shundi Queenstown plans a big new hotel overlooking the lake.
The other big news in the sector in the past week has been Cabinet passing an Order in Council for statutory managers to be appointed to insolvent Auckland apartment and townhouse developer Du Val Group.
PwC’s John Fisk, one of the three statutory managers, says Du Val Group owes approximately $250m.
What next? It seems likely Commerce and Consumer Affairs Minister Andrew Bayly may soon issue an update.
A blueprint is what happened with businesses associated with South Canterbury Finance in 2010.
“It’s a bit like looking at a plate of spaghetti,” Fisk says, citing various entities including funds that raised money from wholesale investors, special-purpose vehicles established for construction, investment in housing and management companies.
All those were under the umbrella of the Du Val Group, ultimately owned by Kenyon and Charlotte Clarke interests, Fisk said.
A priority was to ensure Auckland apartment developments underway were completed.
PwC had met secured creditors funding those “and construction work is continuing on the two main projects”, Fisk said.
Contractors working on those sites were continuing to be paid “so we can complete the apartments being built and subject to pre-sales so we can settle those pre-sales”.
Work at other sites was temporarily halted, Fisk disclosed.
It was “most unlikely” money would be available to creditors because the Du Val Group was insolvent but it would take some time to unpack all the arrangements between the various entities and their activities.
“It’s a very complicated group. You almost need radio with pictures to be able to explain it to you,” Fisk told RNZ on Friday.
Out at Mt Wellington, the roof is on the new Ikea debut building, built by Naylor Love.
The site is across the railway line from Kiwi Property Group’s Sylvia Park shopping centre and its new Resido apartments.
Fabian Winterbine, Ikea’s expansion manager for Australasia and New Zealand, told the Herald about the construction method.
He explained why steel went up first and how walls had been made.
The exterior walls were like an insulated sandwich panel that came complete with the eye-catching blue cladding, which is the distinctive Ikea store colour, he said.
Kiwi Property is developing a three-level building of 32,000sq m, giving an interior floor space of 3.2ha, which is slightly over the size of four rugby fields. Once completed, Kiwi will hand the building over to Ikea.
Auckland Airport is due to open its new $200m 120-shop Mānawa Bay outlet shopping centre at Māngere on Thursday, September 19.
In June, the Herald’s Viva reported how more than 100 stores would open in September, a mix of international sub-luxe brands like Coach and Kate Spade sharing retail space with local brands including Huffer, Bendon and Canterbury.
The outlet centre’s ingoa reflects the airport’s location on the Māngere Peninsula and the historical and cultural significance of the area to tangata whenua.
In te reo Māori, mānawa means mangroves, which are in waterways surrounding the airport.
The building is 2.4ha indoors or 24,000sq m of floor space and the site is 15ha or 150,000sq m with shops to sell fashion, lifestyle, athletic/leisure items, homeware brands and food and drink.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
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