In the last few years in New Zealand, leasehold land has had a bit of negative press. A lot of this seems to be around residential developments on leasehold land where a review in ground rent seems to have taken some owners by surprise. It seems a lot of New Zealanders did not have a thorough understanding of leasehold property, unlike in other localities such as the UK, much of Europe and parts of Asia, where leasehold has been around for a while and is commonplace. New Zealanders have a bit of an obsession with freehold, not realising the many advantages there are to leasehold property, which allows them the opportunity to live and work somewhere they and their employer may not normally be able to afford.
Commercial investors, who tend to be more discerning and well informed than the typical residential purchaser when it comes to leasehold in New Zealand, have long recognised the advantages of developing, investing and occupying leasehold land. Much of the commercial office space along Auckland’s waterfront is leasehold, with large scale landowners having planned, developed and subdivided the land, then selling it off as leasehold parcels, making it more affordable than freehold. This large scale development has resulted in many well planned, attractive developments which make the most of their prime sites, with many situated in waterfront locations, affording office occupiers attractive sea views and excellent amenities. The office buildings tend to provide highly specified accommodation situated on well landscaped grounds with pleasant outdoor common areas, and are within close proximity to entertainment venues, restaurants, cafés and nightlife, which holds appeal for tenants and in turn employees who want to work there, ensuring good demand for the leasehold office accommodation in these localities.
From a residential perspective, one of the advantages of leasehold is it enables people to live somewhere they may not normally be able to afford, giving people the chance to live in stylish, modern and well-appointed apartments close to the CBD and vibrant waterfront. Certainly that is no truer than in the present, where an investor may be able to pick up an inner city leasehold apartment or even penthouse at a bargain price, capitalising on the negative press around residential leasehold property.
Over time the average New Zealander will become more accustomed to leasehold land. What the apparent uncertainty around some forms of leasehold does illustrate is the importance of good quality, professional advice. Jones Lang LaSalle were recently awarded ‘Best Property Consultancy’ in New Zealand for the second year running at the Asia Pacific Property Awards 2012, and are well positioned to provide in-depth, comprehensive advice should the need arise.
About the author
Claire Gulliver is the Assistant Manager, Real Estate Intelligence Service for Jones Lang LaSalle in Singapore.