A developer and KiwiSaver provider are planning to build 10,000 new rental homes worth about $5 billion in the next decade.

Shane and Anna Brearley of NZ Living and default KiwiSaver manager Simplicity have formed a new business to develop Auckland, Tauranga and Wellington build to rent places.

Simplicity members will get first dibs on renting those new homes.

“From 2022 to 2032, we plan to build 10,000 homes. That’s achievable,” said Shane Brearley, estimating the $5b finished value based on today’s numbers.

“These homes will be built in Auckland for the first three years, then Tauranga and Wellington,” he said naming Northcote, Mt Roskill, Ōwairaka/Mt Albert, Point England, Mt Wellington, Tāmaki and Ellerslie as target suburbs.

“We’ll follow the train lines – wherever there are good public transport corridors,” he said of site choice on the isthmus.

All homes are to be apartments or terraced one to two-bedroom places to cater for highest demand, he said.

Sam Stubbs, Simplicity managing director, said the new Simplicity Living would be wholly owned by his business which has $3.9b of funds under management and 74,000 members. But the full NZ Living team of 10 people along with expertise and an established subcontractor and supplier base would transfer to the new company.

The Brealeys wholly own NZ Living which has been an active Auckland developer and will manage Simplicity Living for free. Brealey is an ex-construction chief with more than 30 years of commercial building experience.

In 2004, he left his role as New Zealand managing director for Multiplex, an Australian company, to set up the New Zealand-owned construction business NZ Strong, one of this country’s largest builders which he subsequently sold.

Brealey, who had spearheaded Multiplex’s push into New Zealand, said his “Jerry Maguire moment” came when he decided he had the skills and contacts to leave a large corporate

Brealey said he and his wife wanted to give back to New Zealand and his company joining Simplicity would be a powerful combination.

“We have decided to devote the next phase of our lives to building as many affordable, quality homes for rent as possible.

“Simplicity shares our long term vision. With our skill in building and managing and their ability to fund at scale, we are well-placed to make a positive difference in the housing sector.

“NZ Living has completed or has under construction 700 new homes, selling at a discount to valuation of $30m to assist mostly first-home buyers to get on the property ladder.

“If a little private company with 10 staff can build 270 homes per year, we should be able to get to 1000 annually in a few years with a larger team and pipeline of investment funds.We have land sourced for the first 460 homes identified on day one of this initiative.”

Simplicity Living will also buy NZ Living’s two remaining Auckland developments: 159 apartments in Onehunga and Pt England.

Rent paid by tenants on those 10,000 places is planned to significantly boost Simplicity’s returns.

Stubbs said the business entering the build to rent housing sector continued Simplicity’s history of disruption of the high margin finance sector.

As well as low KiwiSaver and investment fund fees, Simplicity offers first home loans at a 2.25 per cent floating rate, Stubbs said.

Brealey said the new venture would help boost the rental sector which provides accommodation to around 1.4m New Zealanders.

“With Simplicity Living, we have a huge opportunity to offer high-quality homes at long term affordable rents. The returns should be very reliable too.”

Simplicity members will get the first option to rent the new 10,000 places.

Anna Brealey said: “We aim to rent for the long term, so families, the elderly and those saving for their first home can have true housing security without having to own a home.”

Source: Read Full Article