The city is four years into its current development cycle which commenced in early 2013. Since that time, 206 projects have been launched comprising 13,135 units. Of these, 47 projects and 2,455 units have already been completed. 31 projects totalling 2,044 units have been abandoned over the past four years. This equates to 15 and 16 percent respectively of the total number of projects and apartments launched. This refers to projects within CBRE’s definition of the active pipeline for apartments while other statistics quoted on abandonment may encompass multi residential projects outside of this definition. It is also important to define abandonment. Abandonment refers to a specific active pipeline project being abandoned. It does not mean that development plans for the site of this project are completely abandoned. Indeed, a number of the abandoned projects (nearly a third according to our records) have subsequently been relaunched as another project on the same site, while several other sites on which projects were abandoned have been recently transacted to a different developer. This brings into focus the reasons behind project abandonment. A recent focus has been on construction costs and financing as major contributing factors. While these play an important role in the abandonment of some projects, other factors have also been significant contributors to projects being abandoned. These factors include intrinsic project specific attributes boiling down to developers launching the wrong project, at the wrong place, at the wrong price. Some project abandonments might have been down to developer skill and experience. While construction costs and financing are contributing factors which have gained increasing focus this year, they are two of a suite of reasons behind abandonment. While abandonments are a major current market focus, developers continue to launch new projects. So far in 2016, 45 apartment projects comprising 2,600 units have been launched. These launches are spread throughout Auckland and include CBD, Fringe, and Suburban locations. During this period four projects have been abandoned. Auckland Pipeline Apartment Units by Launch Date and Abandonments 700 600 Number of Units 500 400 300 200 100 0 Launched Abandoned The active market for launches this year has been underpinned by purchaser take up. CBRE’s take up data is current to Q2 (to the end of July in our data definition). This shows healthy presales so far this year with 2016 sell down levels being well in excess of previous years. This has resulted in the volume of yet to be sold stock falling to 1,500 units of the 8,600 unit pipeline, with most of the unsold stock found in recently launched projects with limited market exposure to date. Auckland Quarterly Pipeline Presales 1,200 Number of Units 1,000 800 600 400 200 0 Number of Units in Saleable Pipeline Auckland Sold vs Unsold Apartment Units in the Saleable Pipeline 6,000 5,000 4,000 3,000 2,000 1,000 0 Presold Unsold Clearly, the recent publicity around project abandonments has captured the market’s imagination on the back of emerging concerns around construction costs and changes in the banking sector. To date, the impact in terms of actual project abandonments has been limited, but just as abandonments through these, and other, reasons have been part of the cycle since its commencement, abandonment will continue to be an ongoing market feature throughout the remainder of the cycle. More pertinent discussions are to be had around how these issues are being addressed, such as the evolution of the development funding landscape, and the increasing opportunities for larger scale, well-resourced developers to enter the market. While affordability is viewed differently by different people and some see it as a subjective and shifting concept, it, and its related concept of “value for money” will increasingly impact on future launches and abandonments. The next stage in the market’s evolution in relation to project success will once again be more related to intrinsic project specific attributes boiling down to developers launching the right project, at the right place, at the right price.