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The National Policy Statement on Urban Development 2020 (NPS-UD) offers developers an opportunity to increase the density of urban projects, but the jury is still out on how cost, infrastructure and demand will impact the uptake.

The NPS-UD sets stronger density requirements in Tier 1 urban areas which include the main centres and larger regional hubs such as Hawke’s Bay.

The Ministry of Environment describes the NPS-UD as being “about ensuring New Zealand’s towns and cities are well-functioning urban environments that meet the changing needs of our diverse communities. It removes overly restrictive barriers to development to allow growth ‘up’ and ‘out’ in locations that have good access to existing services, public transport networks and infrastructure”.

As well as increasing the number of residential units on brownfield and greenfield development sites, the policy statement also allows for larger builds on smaller sites, and frees developers from car parking requirements.

Bayleys land sales specialists say that at first glance the NPS-UD offers greater scope for developers to intensify their projects and potentially maximise their value. However, they say an immediate development free-for-all is unlikely as developers and investors test the practical application of the new rules against market demand, the availability of investment and infrastructure pressures such as transport and wastewater.

Bayleys director – Development Land Sales, Gerald Rundle says developers will certainly see the potential in increasing the intensification of their existing or planned sites within urban boundaries, but decisions will still need to be market driven.

“Just because you can provide higher-density housing, doesn’t mean the market wants it. Good examples are the areas around Auckland that are zoned for terraced housing and apartment buildings (THAB) where the preference is still to build three-level terraced houses,” Rundle says.

He adds that many sites, particularly brownfield areas, won’t have the services necessary to allow for higher density in the short term. “Developers are looking at the opportunity from the NPS-UD against things like will the pipes be good enough? Will there be issues that come from everybody parking on side streets?

“It sounds great, but there is a lot to consider and the advantages could be very site specific.”

The planning changes have motivated Bayleys to put together dedicated Development Land Sales and New Builds teams with representatives around the country to help buyers and developers navigate the new rules. The Development Land Sales team works with Bayleys’ residential specialists, to ensure developers are fully supported from the start of their land search to the sale of finished units.

“It’s important to have a specialist team for new builds in this environment. It helps owners and developers understand the opportunities their properties may have.

“We can advise them on how to add the most value without over-investing trying to achieve it.”

Total Property has asked some of Bayleys’ land development specialists what’s happening in their region, and how the NPS-UD might impact it.

West Auckland

Wesley Gerber

Associate director - Development Land Sales, Bayleys Northwest

The NPS-UD will allow for better utilisation of land not just in allowing more homes, but bigger homes on smaller sites and in how it impacts things like height in relation to boundary, site coverage and outlook.

It is still quite early days, so it’s hard to predict exactly how things will play out, but developers will definitely be factoring it in as they look to acquire land for developments.

Auckland’s Hobsonville Point is a good example of the types of high-density development that will be increasingly possible and aimed at urban families looking for low-maintenance homes with communal public areas that they don’t have to maintain themselves.

The way we live is changing. These types of development reflect that and there is a huge push from the government for increased density, but developers will still be having conversations about just what the market is for it.

The urban development policy changes will probably be seen most notably around Auckland’s NorthWest shopping centre. That is where the huge growth is, in an area that is a natural extension to Auckland’s urban limits.

South Auckland

Shane Snijder

Associate director – Commercial and Industrial, Bayleys Pukekohe

The rapidly growing region south of Auckland has unique challenges as the NPS-UD promotes intensification, while both local and central governments take steps to protect prime food producing land.

That has an impact on the land available for dense urban development. Everything west of Pukekohe is going to be very hard to develop to protect that horticultural land. The eastern side is not as productive.

Successfully intensifying those tracts of land able to be developed will also need support with additional investment in infrastructure and transportation. The capacity of water and wastewater systems and transport routes are the biggest challenges to intensified development around Pukekohe.

The developers take on enough risk, without making them responsible for that investment as well.

Having access to a dedicated land development team such as the one Bayleys has put together will be hugely helpful in assisting developers navigate the challenges to get those intensive projects off the ground.

Hamilton

David Cashmore

Director, Bayleys Waikato Commercial

The consensus from most developers in this region is that removing some of the restrictions and constraints is a positive thing, but we are also seeing local councils make countermoves.

Developers are very much doing a lot of watching. The market has been softer, so they’re waiting to see how things play out. There could be some concerns about creating an oversupply.

There have been some well-publicised objections from Hamilton City Council to the NPS-UD blanket approach by the government.

I expect local councils will want to mitigate higher density development to some extent, using other criteria like stormwater, overlays and site coverage.

Things will change but maybe not across all suburbs and not as dramatically as first thought. I don’t think we’ll see three-by-threes going up everywhere.

Hawke’s Bay

Kerry Geange

Commercial manager, Bayleys Napier and Havelock North

The NPS-UD will drive the long-term planning for residential living in Hawke’s Bay, increasing density, and changing the “feel” of living in regional New Zealand.

This is not a bad thing but will take some time for people to adjust – especially those who have lived here for long periods of time. The type of housing stock will vary and give people more choice, and people will have more time to be living in the community, rather than at home looking after their larger or older properties.

With both Napier and Hastings falling into the Tier 1 category in respect of the NPS-UD, developers and residents are closely watching what impact the changes will have on larger metropolitan areas.

We are already seeing more build-to-rent developments, medium-density first home and smaller residential investor buyer-specific stock.

I expect we’ll see fewer “mum and dad” investors owning one or two residential investment properties and more specialist professional residential property investors.

Bayleys’ Development Land Sales team and New Build Team will add significant value to the development market, as well as provide market dynamics into councils’ policy process. This will ensure that market demands and concerns can be provided for early.

In addition, we can work with developers to ensure they are building what the market wants and will want at the right time, rather than just replicating what sold last month or last quarter.

Christchurch

William Wallace

Bayleys general manager Commercial and Industrial – South Island

While the NPS-UD is aimed at intensifying residential developments, in Christchurch there is also a pressing need to free up land for commercial and industrial developments.

Large tracts of land owned by the likes of Calder Stewart and other significant landowners have been ear-marked for multi-use developments including industrial. Planning policy changes could see them consider how to make the best use of those sites and where the best opportunities lie.

The issue here isn’t so much about the need to intensify developments but the fact that we just don’t have enough land available so there’s hope that new policies might help address that by freeing up some of the constraints.

Christchurch, particularly, is unique in that post-earthquake we have some of the best infrastructure in the country, particularly for transportation routes. Areas like Rolleston are really gearing up for large growth in population as well as in commercial and residential development.

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