New Zealand’s superannuation fund has formed a NZ$300m (€185m) partnership with a domestic developer, Classic Group, to create land for affordable housing across the country.
NZ Super Fund will have an 80% interest in the Kaha Ake venture with Classic holding the remaining 20%.
The first project will be the development of a site in Warkworth, North Auckland, to supply more than 500 lots for a new community.
Hishaam Mirza, NZ Super fund manager, direct investments, said the deal was part of the NZ$58bn fund’s broader strategy to increase exposure to real estate.
Mirza told IPE Real Assets that 70% of the sovereign wealth fund’s portfolio is invested in passive and liquid investments, such as bonds and equities.
“We see this as offering the combined opportunity of diversifying our portfolio and getting access to an interesting asset class which we cannot get in the public market.”
NZ Super has been participating in direct residential development since late 2015.
Explaining the rationale of getting into land development, Mirza said: “We find getting into land later in the cycle can be expensive. It makes sense to get access to the land, develop the infrastructure, and subdivide it. We will have the option of either developing it ourselves or selling the land to other builders.”
“Over the next three years, we will put up to 3,000 housing blocks onto the market at a price that will be conducive to affordable housing. The land will be sold at a discount to the prevailing median price.
Classic Group director, Peter Cooney, said: “With the long-term financial support this partnership offers, Kaha Ake will be in a strong position to support development of homes at a pace and scale that will help meet demand for quality affordable housing.”
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