Developers of a major apartment complex in Onehunga are facing an exodus of contracted buyers because of issues that have put the project at least two years behind schedule and more than doubled build costs.

Many of the more than 60 buyers who bought into the 88-unit Beachcroft Residences are understood to be taking legal advice after a high degree of uncertainty as to when and if the development will be finished, according to buyers who spoke to BusinessDesk. 

Erson Developments, owned by Aucklanders Bruce and Anne Clegg, was granted consent to build in a ‘special housing area’ five years ago because at least 10% of the units were classed as affordable housing. 

Rodger Shepherd, the former chief executive of Fairfax and Mercer Stainless Steel, was brought on board as project manager and owns 10% of Erson Development shares.

The development – designed by CBA Design – is the Cleggs' largest property venture although they are understood to have developed a number of smaller residential and commercial properties.

Bayleys Projects began marketing the property in 2016, advising purchasers in March 2018 that they’d met the sales threshold and were ready to start construction.

The main contractor, Teak Construction, broke ground on the Beachcroft Ave site in September 2018. By May 2019, Bayleys advised that good progress was being made and purchasers will be “sipping cocktails from their balcony in no time.”

A year later, in July 2020, Bayleys advised the roof was going on. 

But in early May this year, construction ground to a halt – and there’s still no roof.

A consenting spokesperson for the Auckland Council said Beachcroft was being constructed using a three-stage building consent process. While consent had been granted for the first two stages, consent for stage three had remained on hold since March last year.

In particular, he said, the council was still waiting for further information on the façade, cladding and further detailed drawings, which to date hadn’t been received.

Two buyers told BusinessDesk they’d received a letter from Bayleys in May, noting that the developer, Erson Developments, had appointed Rawa Property as project managers.  

But the completion date had now been pushed back “at least 12 months” and that probably means “at least 18 months,” a buyer said. 

He said he’d started referring to the development as “Fawlty Towers”.

Blame covid

Rawa Property project manager Matt Currie said the delays were the result of a “range of market factors”, including disruptions from covid, ground conditions and supply chain issues.

Currie also alleged inexperience by the prior project management team, headed by Shepherd. The cost of the development had also risen to $85 million, more than double the initial construction estimate of $40m.

Shepherd told BusinessDesk that while the development had clearly “taken longer than expected” he expected it to get back on track and that the Cleggs were still fully committed to the project.

Shepherd resigned as a director of the development firm earlier this week, on May 31, not offering any reason for doing so.

An artist's impression of the finished development

One buyer, who put a 10% deposit down on an $860,000 one-bedroom apartment overlooking the Onehunga Bay reserve and lagoon, said he and his wife had sold their family home after being told they could move in by June 2020.

Legal threats

He didn’t wish to be named after receiving legal letters and a note from Shepherd last year, suggesting that if he didn’t extend his sunset clause – which provides an out for the buyer if the agreed build goes past deadline – Shepherd would resell the apartment.

Shepherd said that he didn’t want to do that, “even though I would make good money doing it and ask that you reconsider your approach”.

BusinessDesk is aware of another buyer who had concerns and was weighing a legal exit, although the value of the apartments will have gone up significantly. 

Bayleys' sent an update to buyers on May 26 saying it had spoken to many buyers in the last two weeks and had met with the project manager to "address your concerns and get further clarity around the issues and delivery timeframes".
"Many of you have been asking about your options given the significant delays. We would encourage you to seek independent advice through your solicitor in the first instance."

Suzie Wigglesworth, national director of residential projects with Bayleys, said while regrettable, delays of this nature were “part and parcel” of a development of this complexity. 

“It often happens at about this stage of development, but the developer has recommitted to the project. We know a lot of developers who would have given up having faced these kind of hurdles.”