Kiwi Property is to build a 295-apartment complex in Auckland in the country's first major build-to-rent development.
The complex will be part of its Sylvia Park site, where it's been building a mixed retail and office development.
Build-to-rent accommodation is common overseas, where it is developed, owned and managed by institutional landlords, aimed at long-term rental.
"Build-to-rent is poised to become an important part of our portfolio, further diversifying our asset base, unlocking growth and promoting valuation uplift," Kiwi Property chief executive Clive Mackenzie said.
The $221 million project would be a mix of studio through to three-bedroom apartments, with associated amenities and services.
The project is being funded by debt, pending the outcome of the sale of the The Plaza and Northlands shopping malls. Kiwi Property said the development would have a net yield of about 4.5 percent, and would return more than 8 percent over 10 years.
Mackenzie said using its own sites meant that it was able to reduce costs and improve returns, while getting operational gains and economies.
He said with the housing market getting more difficult and expensive for younger people to enter, build-to-rent developments would be an attractive option.
"This new asset class has the potential to play an important role in helping address the growing demand for rental accommodation and alleviate New Zealand's housing shortfall," Mackenzie said.
The company has also applied for consent for a 25-storey building at its LynnMall property, which would include 245 rent-to-build apartments, as well as shops and offices.
Mackenzie said in time Sylvia Park would be able to accommodate 1200 apartments and LynnMall more than 600.
"The size of these assets and ability to overlay multiple developments creates an area of distinct competitive advantage."
He said the company has taken steps to lock in some development and building costs, but also built in contingencies to cope with rises in costs, but future developments would benefit from fairer and more balanced tax rules.