New Zealand’s Most Expensive Home Ever Is Hitting the Market

(Bloomberg) -- Construction broke ground in 2017 on the Pacifica, a 584-foot-high tower in Auckland, with a design plan that included 285 apartments, a boutique hotel, and ground-floor retail. When completed, it will be the tallest residential tower in New Zealand.

As it began to market the apartments, the building’s developer, Hengyi Pacific (NZ) Ltd., discovered concentrated demand for larger, more expensive units. It tweaked the design, reducing the number of apartments in order to expand footprints. The largest, a 13,000-square-foot “super penthouse” that occupies the 53rd and 54th floors at the top of the building, is now hitting the market for NZ$40 million ($23.9 million). The listing is represented by Jason Gaddes and Scarlett Wood of New Zealand Sotheby’s International Realty. 

Should the apartment sell, it would probably be the most expensive recorded sale of a single-family home in the country’s history. The prior record was set in 2013, when a seven-bedroom mansion in Auckland sold for about NZ$39 million. 

“The original design didn’t have this penthouse drawn up,” says the developer’s New Zealand general manager, Elizabeth Scott. “About 18 months ago, it became something we could contemplate. I guess it was a big call to make, but this year we pressed the button and had our engineers redirect their attention to enable the penthouse to be constructed.”

“We believe there’s a market for it,” Scott says. “It’s unlikely that an opportunity like this will come along again soon.”

The Demand

Scott says that 85% of the building’s apartments have already sold.

Of the remaining units, the starting price for a one-bedroom is about NZ$800,000 and climbs to about NZ$10 million for one of the lower penthouses. Median house prices in Auckland hit a record in March of NZ$950,000, according to the Real Estate Institute of New Zealand. 

She continues that even though the recent Covid-19 related shutdown in the country has thrown a wrench into her company’s plans, it’s not all doom and gloom. “We sold one of our penthouses over the period [of the shutdown] for about NZ$7 million,” Scott says. “I was very surprised. I thought activity would come to a standstill, but that wasn’t the case.”

That sale defies an overall downward trend in Auckland’s 2020 Q1 residential sales, according to a Knight Frank report, which showed a negative .7% change in sales volume over the past 12 months—and a steeper -2.7% drop over the past three months. 

In addition, the asking price of the “super penthouse” is high enough to put it in competition with marquee  properties in global financial centers such as New York, London, and Singapore. In those markets, the overall demand is similarly uninspiring: They have suffered for several years from saturation of supply and diminished demand.

Still, Scott says that current Covid-19 related volatility could work in the penthouse’s favor. “New Zealand has become a consideration for some people,” she says. “Certainly, expats are looking back at New Zealand and saying, ‘Perhaps I should come back and bring my family.’” (The country pursued an aggressive elimination strategy that seems to have worked. Today, new daily infection numbers are in the single digits and on May 11, the government announced it would exit its seven-week lockdown.)

Moreover, the penthouse holds a trump card: Even though New Zealand law says foreign buyers must obtain Overseas Investment Office approval before buying a house, the developer says that the penthouse (along with the rest of the units in the Pacifica) is exempt from that restriction. The building was already under construction when the law was enacted. “Hengyi was therefore able to apply for [...] and be granted an exemption from these restrictions,” Scott wrote in a follow-up email.

Warm Shell

Currently, the penthouse is a “warm shell,” meaning its exterior is in place but its interior is unfinished. Should a buyer wish to buy the apartment as is, the price would be about NZ$35 million. Scott says that this is the most likely scenario. “A warm shell provides the most flexibility in what a range of purchasers might hope to achieve,” she says. “They wouldn’t have to come in and try to redo something, which in itself can be quite wasteful.”

Should a buyer prefer the finished product, though, the developer has a plan in place. The proposed floor plan includes a lower level with an open concept dining room, living room, kitchen, and lounge. (Not to worry: There’s a closed-off “butler’s kitchen,” where the real work can be done.) That level also has a conservatory, media room, office and “board room,” and library. 

On the second floor are five bedrooms, including a master suite that takes up a full corner of the building. The upstairs floor plan calls for its own gym, sauna, and spa. 

Aside from the sheer space, Scott says the building’s position overlooking the Hauraki Gulf  is “absolutely stunning.” The penthouse might become the most expensive sale in New Zealand, she says, “but if you compare our offering globally to apartments of a similar ilk in global cities, it’s very well-priced.”

The finished apartment—or even the empty shell—“is certainly consistent with what a lot of people expect,” she says.

©2020 Bloomberg L.P.