Mamari Road, Whenuapai

This property we came across is a medium sized landbank of Future Industrial land in the rapidly changing Whenuapai. This is a piece of land which sits in a very strategic location within the Whenuapai Structure Plan with massive future potential in the mid-term. In addition to this property being a fantastic buy and hold, we believe this property could be acquired for 30-40% below its market value and may represent an interesting opportunity to also “flip” the land for short term gain with a different marketing strategy.

The site is 4.5Ha (45267m2) of Future Urban (Light Industrial) zoned land. The most recent 2021 CV is $6,750,000 comprising mostly of land value. It last transacted in 2013 for $2,200,000. If these two numbers are anything to go by, in those 8 years this property achieved an annualised growth rate of ~16%. This is significantly more than the Auckland average but not uncommon for a larger landholding in a growth suburb undergoing zoning change and large-scale investment. Note that this is just indicative as the CV’s of landbanks are often not particularly useful.

Before we talk more on pricing, this site has a number of features which make it one of the premium blocks of land in the wider Whenuapai area:

• This site has very good drainage qualities. Within it’s immediate vicinity of ~250m radius, this site is the flattest and perfect for Industrial. Within it’s vicinity of a 750m radius, this site is arguably still the flattest. This 750m radius in the zone bound by Trig Rd/Brigham Creek Rd/North Western Motorway comprises around 60% of the total Industrial or Future Industrial land within the Whenuapai Structure Plan. Extending this comparison to the entire area of Industrial/Future Industrial land, it could be said that this site is still the premier site in terms of flood mitigation and stormwater management. The entire site sits on the brow of a hill which slopes off at its boundaries to natural estuarine watercourses to the north and west. The majority of other properties either have good drainage to the watercourses but are more sloped or they are flat but with worse drainage. The only other site in the area which has comparable drainage qualities would be the Spedding Block to the south. Unsurprisingly, Developers have already bought that precinct and subdivision is currently underway there (see below comments).

Hydrology overview and underground services

• Underground services. While this site is not fully serviced greenfields land, it does lie in a position quite strategic for servicing the land. There are Wastewater (355PE pressurised rising main) & Water Lines (50mm older Asbestos Cement) running along Spedding Road which is around 200m from the boundary. The Spedding Road watermain would require upgrade in due course to service industrial sites throughout the area. A ballpark cost of a 150mm PE installed at 1.2-1.8m depth would be around $900/m assuming consistent fall and typical ground conditions. The likely cost to improve via connectivity to Spedding Rd would be ~250k but the increase in property value would be in the millions. There may also exist an opportunity to “piggy back” from water upgrades within the nearby Spedding Block development. The best course of action may be to sit back and wait for Mamari Rd upgrades to fully service the site.

• This site is in close proximity to another major development on Spedding Road next door. Spedding Road Block is a 52 hectare piece of land bound by Brigham Creek Road to the north, State Highway 16 to the south-west, and rural-residential land to the east and south. Oyster Capital progressed a process to rezone the site from the Future Urban Zone to Business – Light Industry Zone between 2019 and 2022. The site will be developed in stages to create a strategically located Industrial hub conveniently located adjacent to State Highway 16 and in close proximity to State Highway 18, whilst also being positioned close to the rapidly growing surrounding residential areas of the north-west. Multiple infrastructure upgrades will be provided as part of the development of the site, including extending Spedding Road through to Brigham Creek Road, and significant upgrades to existing sections of existing roads that adjoin and surround the site. “Follow the money” is one well known strategy in land-banking. The closer you are to major developments, the higher your chance of major price growth. It always pays to understand who the neighbours are or where the Developers are buying up.

• Area upgrades. Within the entire area shown below, this property is affected by the following:

  • New Spedding Road, proposed 2025 (yellow zone below). This will significantly increase the land value, creating an arterial between Hobsonville to Westgate as well as Stormwater upgrades & culvert works in this road corridor.

  • Mamari Road upgrades (blue zone below). Timeframe unannounced. This will further enhance the land value with improved utilities, access and traffic connectivity with the surrounding area.

NZTA area wide plan

The roading upgrades near the Spedding Road/Mamari Road Roundabout

• The site has good road frontage, access and visibility considering the proposed upgrade to Mamari Rd.

• This site is in close proximity to dual motorway accesses.

• This shape has an ideal shape factor which will make for efficient future development (higher NSA).

• Based on these and other assessment criteria, we rated this site with a DI Score of 83%. Geospatially, this land is superior to the majority of industrial land nearby. The net developable area was assessed as 44,357m2 (98%). We cannot find any information to suggest that ecological areas, wetlands or drainage infrastructure would create further land loss of developable land. It is possible that a small slither of land from the east boundary may be acquired (at market rates) by NZTA to complete the Mamari Road upgrade but there is no confirmed IFC drawings to verify at this stage.

To comment on pricing…

• The $68,000,000 land deal on the Spedding Road Block of 13 & 15-19 Spedding Road for ~43 Hectares of Future Urban Zoned land is significant. This equates to around $157/m2 but was back in mid-2019. In todays terms, we believe this equates to $175/m2 for a wholesale sized land deal. This one is difficult to compare due to the size of the land offering likely significant discount to the purchaser.

• 5 Spedding Rd is a block of land which has recently sold last month and is very similar but more development ready. We cannot disclose the price this sold for but the land component is north of $300/m2.

• There are a number of sales in the last five years or so on nearby Brigham Creek and Trig Roads. Some of these are poorer sites but more development ready. There’s a bit of a range around the $200-400/m2 territory, unadjusted.

• On Mamari Rd there’s really only 28 Mamari Rd which sold many years ago. This is a mixed bag site. Good dual access and serviceability, more development ready but will have lower NDA. This site is inferior and we wouldn’t recommend as a premium site. It sold for $114/m2 in 2016 but we believe is worth $152/m2 in todays market for the larger land area. We believe this would be a reasonable lower bound unit rate for 11 Mamari.

On a comparables basis, we assessed 11 Mamari to be worth $210/m2 plus the value of the buildings (minimal). This equates to $9.5 million. As a reference, the CV is $6.75 million and the Agent was talking in this territory. There is potential here that this one can be acquired for a discount to the tune of ~30% or more. With the upzoning of the adjacent Spedding Block property in 2022, it is almost certain that this upzoning works hasn’t been priced into the most recent 2021 CV on 11 Mamari Rd. This is a good example of why CV’s on landbanks can often be irrelevant but sometimes Agents apply them through lack of other intel.

Another interesting comparison to make on this is the comparative price of the land if it was currently live zoned. If this was currently a Light Industrial site ready for subdivision, it’s value would be in the $20 million plus territory. If an industrial subdivision such as the Spedding Road Development was to be undertaken, this site would likely yield a ballpark around $40-45 million in lot sales on today’s value. Obviously, there are many steps and cost before that stage, but the point is to show the profitability that good development sites can have when selected and purchased carefully. We calculated residual land value to complete an up-zoning and development on this site to be in the vicinity of $8.5M based on an 8 year timeframe, assuming typical development costs and hurdle rates according to risk profile.

The pricing must be considered in conjunction with market fundamentals. The Whenuapai area is pretty flat right now from a supply and demand perspective. We assessed the area of undergoing no major price surges in the coming months. That being said, if one or two more landbanks were to change hands this market has the potential to heat up. It’s not uncommon to see $15 million plus landbanks changing hands in this area. Under current market conditions, with development intentions for this site, we believe a price around $8M is reasonable. If purchasing as a speculative land bank, in this market we believe a target around $6-7M is reasonable. Anything less than these two targets is a great purchase for prime land with solid engineering fundamentals.