$1.2 million per apartment: Kāinga Ora’s new apartments are part of billion-dollar scandal, says developer

Mark Todd, co-founder of developer Ockham Residential, believed the project’s cost-per-apartment highlighted the agency’s “incompetence and lack of experience” and said reports piled up $12 billion in debt over five years as a scandal.

“Kāinga Ora’s billions of dollars of expenditure in its five years of existence is a national embarrassment for what it costs to deliver each house,” he said.

He believed the agency should have delivered two or three times as many homes for the amount of money spent.

Injected with billions of dollars by the previous government, Kāinga Ora built a record number of new homes every year, Labor says.

However, the new National-led government immediately put its performance under the microscope.

Former prime minister Sir Bill English led a review which said the agency’s debt had risen from $2.7bn in 2018 to $12.3bn in June 2023 and needed to be increased to $23 million by 2028.

The agency also ran up a deficit of $520 million in 2022-23, which was projected to grow to $700 million in 2026-27, the review found.

As a result, Housing Minister Chris Bishop fired the agency’s eight-person board.

“Kāinga Ora has a new board whose first job is to deliver a turnaround plan to ministers before the end of the year,” Bishop said in response to questions about the costs of the Meadowbank project.

“As part of that plan, I hope they will consider the possibility of achieving better value for money in their building programme.”

Acte Party building and construction spokesman Cameron Luxton said the Meadowbank apartments made it clear that “Kāinga Ora needs to stop buying six-star apartments in prime real estate”.

Ockham Residential’s Todd believed Kāinga Ora’s extravaganza was highlighted by how it took on more than 1,000 additional staff between 2017 and 2021.

By contrast, it took 15 years to build Ockham Residential to its peak last year, when its 95 skilled staff delivered $440 million worth of apartments, he said.

His company is selling two- and three-bedroom apartments in the Toi d’Ockham complex in Pt Chevalier for about $900,000. A three-bedroom apartment in its The Greenhouse Gray Lynn complex sells for a similar price.

However, Labour’s acting housing spokesman, Willie Jackson, defended Kāinga Ora, saying the government was throwing away hard-won experience to launch the agency and address the housing shortfall by to the needy

The Government plans to use community housing providers to build the 1,500 public homes currently planned.

However, Jackson claimed community housing providers had built houses that on average cost 10% more per square meter than Kāinga Ora houses.

Philippa Howden-Chapman, a professor of public health and former Kāinga Ora board member, also believed the government was turning its back on the state group so it could reduce the number of homes built in the future.

Kāinga Ora said its Meadowbank project met all its financial metrics at the time of approval.

The $11 million price tag includes engineer, architect and council fees, as well as infrastructure and construction costs, among other expenses.

The two-bedroom apartment, which opened to the public yesterday, included a small lounge and dining room and a kitchen with basic stainless steel worktops and an oven.

It was wheelchair accessible and the Sky Tower could be seen from its front window. The apartments were right next to the train station and popular hiking and biking trails.

One neighbor who asked questions about the cost of the apartments said they were in one of Auckland’s “prime” locations, but another said he was “very sympathetic to the need for more state housing” and that if the government already owned the land “it made sense” to build them there.

David Findlay, owner of Harcourts JK Realty Group, said prices tend to vary widely for the smaller three-storey complexes, often preferred by Kāinga Ora because they don’t have to have lifts – between 4500 and 9500 square metres.

He said Kāinga Ora would likely come under greater scrutiny for building poor quality homes and that he believed it had often erred on the side of higher quality builds, paying more for reputable builders and warranties of quality

Ray White Manukau co-owner Tom Rawson asked why Kāinga Ora didn’t sell off its land in places like Meadowbank and instead build more in the outer suburbs where more people could be accommodated for less, saying the new price $1.2 million. Apartments could buy a five-bedroom house in South Auckland.

Todd from Ockham Residential said he wanted to be clear that he supported public housing.

“I’m all for New Zealand spending billions of dollars on state housing … the state should be massively involved in affordable and social housing,” he said.

He said he believed community housing providers should be favored because they rarely wasted money considering how hard they worked to secure it, he said.

He also called for greater involvement and use of the expertise of the country’s largest builders in building large public housing blocks of five storeys or more.

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