Living above malls may be new trend

Residential developments above shopping centres could be the next big thing, according to property, design and research company RCG.

The Auckland firm says it is one of 25 property trends it identified for its latest property research paper, Constructive Thinking. It's an idea that has been considered before but is gaining traction as demand for higher-density accommodation increases, says the report.

"By adding residential, shopping centres can get more value out of their land, and add to their catchment. This will turn shopping centres into real town centres and add round-the-clock activity to places which become passive after 6 o'clock.

"Bear in mind, this opportunity will be very centre-specific. We've heard Milford, Pakaranga and The Warehouse Group are considering this tactic."

The report also predicts, not unexpectedly, that more apartments and terraced housing developments will be built. "Even though the trade-off is having less space, when there's high demand for land these homes become incredibly popular for their location and price.

"The demographics support it -- baby boomers are looking to downsize, and young adults are having fewer children. Now is the time to build."

It also claims that growth in international investment will push property prices up.

"New Zealand's property returns are high and less risky by overseas standards. This will support property prices in areas that are internationally attractive.

"In 2014, the Singapore Government invested $1.2 billion into the Westfield shopping centres and Wynyard Quarter developments. Expect to see more of this happening and property prices increasing as a result."

Falling into line with many financial commentators, the RCG report says mortgage rates will remain lower for longer.

"Interest rates are low around the world, as is inflation, and it is increasingly clear that this is the new normal," says the report.

"In New Zealand lenders are offering long-term finance at low rates, most interestingly TSB has come out offering 10-year mortgages at 5.9 per cent. Similarly, office owner Precinct Properties has locked in funding from US institutions for 4.2 per cent."

City schools will need to intensify to accommodate increasing student numbers, says economist and associate director of RCG John Polkinghorne.

The report also says schools in growth areas are figuring out how to accommodate increasing student numbers. "Looking at Auckland city, the pressure is most intense in Devonport, Waitemata, Mt Albert, Mt Eden and Orakei. These areas will benefit from a sound master plan and development strategy."

Locality and convenience will be major influences as time becomes increasingly valuable to us. This will cut across all property sectors, particularly in retail, residential and office. We will look for locations that are within easy reach of end users -- close to road links and public transport. In Auckland, sites close to train stations will be particularly lucrative. Carparks will continue to be critical.

By Steve Hart, NZ Herald

© RCG Ltd 2012
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