New Ground Capital sees build-to-rent as part of the solution to New Zealand’s housing crisis

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New Ground Capital sees build-to-rent as part of the solution to New Zealand’s housing crisis

March 24
21:03 2022
New Zealand investment firm New Ground Capital is leading the way in the country’s build-to-rent sector and think their approach can help solve the country’s housing crisis.

It’s no secret that New Zealand, like many countries around the world, is currently facing a significant housing crisis. High demand from the combination of growing populations and smaller household sizes, coupled with soaring house prices, increasing interest rates and now prohibitive lending restrictions, are creating a perfect storm to lock people out of decent accommodation.

The build-to-rent sector, which has been established for decades in North America and Europe but only recently in New Zealand, seeks to create better options, and leader in impact investing, New Ground Capital director Roy Thompson, says that Build-to-Rent is a piece of the puzzle needed to help solve the housing crisis over time. 

What is build-to-rent?

Build-to-Rent houses are built solely for renting and aim to provide a better option for both tenants and landlords. Tenants are guaranteed the security of a long-term tenure in modern, healthy, and well-managed new builds. In turn, it offers those who fund and maintain the development, yearly rental yields and returns on the investment.

How can build-to-rent make a difference?

With 1.8 million dwellings, worth over $1.4 trillion dollars, property is the country’s largest capital market. It includes a stock of more than half a million rentals housing 1.5 million members of the population. 

These privately owned rental properties are leased mostly by landlords seeking capital gains and Thompson says most of them are not willing to provide secure tenure above their required legal obligations. “If you ask us if there’s a significant opportunity to provide better quality rental housing on more tenant-friendly terms, we would say we absolutely think so.”

The challenge is growing the build-to-rent sector to become a core part of the makeup of housing in New Zealand. Build-to-rent’s large-scale, equity-funded supply is a solution to the desperate need for additional supply. It just depends on developments continuing to have regulatory support and encouragement to help encourage investors to get on board. 

This may be easier said than done with some investors nervous to dip their toes into what is still something of an unknown in this country.

What has New Ground Capital achieved? 

But New Ground Capital has been a pioneer in the build-to-rent space since 2014, and Thompson says the evidence is fast becoming clear. They have initiated the development of 543 new homes in Auckland and Queenstown, 60% of which have been kept as long-term rentals. In addition, they have several new projects in planning and development stages across Auckland including in Glen Innes, Mangere, and Mt Albert, and in Tauranga.

With tenancies of up to 7 years and flexibility to exit early, the build-to-rent option is allowing tenants whose housing security is so often at the whim of their landlords to breathe a sigh of relief. 

As far as Thompson is concerned, that’s the way of the future.

Conclusion

New Ground Capital is paving the way for New Zealand’s build-to-rent sector and helping spread the word of how this may be part of the solution to New Zealand’s housing crisis. To find out more visit the New Ground Capital website.

Media Contact
Company Name: New Ground Capital
Contact Person: Roy Thompson
Email: Send Email
Country: New Zealand
Website: https://www.newground.co.nz

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