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Trio of new buildings offer Build-to-Rent treasure trove

Three residential buildings featuring 96 brand new apartments are generating interest amongst investors amid more preferable treatment of build-to-rent (BTR) housing assets and a widening gap between the country’s housing supply and demand.

Buildings A, B and C at 148-162 McLeod Road occupy 3,334sq m (more or less) of freehold land in Te Atatu, a West Auckland growth node experiencing a high degree of urban redevelopment.

Bayleys Metropolitan Markets Investment Sales director Tommy Zhang says the assets present a unique opportunity for an investor or syndicate to enter the BTR market at scale by acquiring one or all three blocks, which are due for completion in April.

“While purpose-built BTR concepts are a new form of housing in New Zealand, the asset class has proven extremely popular in the United States and has a rapidly growing market in the United Kingdom and Australia.

“Typically consisting of medium-to-large-scale housing estates within walking distance of key transport links, they tend to be professionally managed and offer long-term leases to tenants.

“This is particularly valuable given the current strain on existing rental supply, multi-decade high population growth, and a slowing building and construction pipeline.

“Challenges in supplying affordable housing at scale and pace have prompted the new government to voice support for the BTR housing model, with proactive legislation for the sector forming part of its 100 Day Plan.”

Mr Zhang is marketing the Te Atatu complex for sale as one or three separate parcels with Bayleys colleagues Layne Harwood and Ian Hall.

The freehold opportunity is featured in Bayleys’ latest Total Property portfolio, offered for sale by tender, closing at 4:00 pm on Wednesday, 24th April 2024 (unless sold prior).

The units are part of the wider McLeod Green development, which includes another 60 terraced houses sold separately to owner-occupiers and investors.

Bayleys Investment Sales director Ian Hall says that the five-storey apartment buildings at the centre of the development have a similar design and layout, featuring a combined gross floor area of 6,160sq m (more or less).

“Each of Buildings A, B and C accommodates 32 two-bedroom apartments ranging in size from 50 – 53sq m (more or less) with car parking on grade and at basement level.”

There are 69 covered and 27 open car parks with central lift access to each block.

Units are available with vacant possession, presenting a new owner with the flexibility to tailor their rental strategy.

“This might entail crafting distinct tenancy agreements, implementing comprehensive property leases, arranging separate management contracts or exploring collaboration with community housing providers,” says Bayleys Metropolitan Markets team director Layne Harwood.

Bayleys Residential Report 2023 found the average estimated pre-tax net yield for residential property investors was 3.30 percent, with an average estimated annual capital gain of 7.10 percent over a 20 year tenure.

“While this speaks to the broader investment market, our research shows that intensive BTR assets typically offer a higher rental yield than other residential developments given occupational consistency, economies of scale, asset location and demand.

“The subject property is a prime candidate for BTR use. It is just 20 minutes from downtown Auckland via State Highway 16, with a strong local community and greenspace, excellent public transport links, and proximity to schooling and commercial/retail services at Henderson and New Lynn.”

Click here for more information on the listing.

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