Lord of the Rings v America's Cup: Who'll win battle for rentals?

Lord of the Rings v America's Cup: Who'll win battle for rentals?

When Games of Thrones was in the midst of filming in Belfast, in the UK, production staff were so desperate for accommodation they sent flyers to local residents asking if they could rent their homes.

Source: ONEROOF

With Amazon announcing this week it will film its mammoth Lord of the Rings TV series in Auckland over the next five years, can Aucklanders expect the same?

The TV show, which will mainly be shot at Kumeu Film Studios, is already rumoured to be the most expensive TV production in history - with reports circulating earlier this year of a US$1 billion budget.

While the number of cast and crew for the show has yet to be confirmed, Auckland can expect an influx of Game of Thrones-style numbers: that show had 3589 people working on it. Many of those working on the Rings will be Aucklanders, but there will be an international cast and production crew, as well as Kiwis from outside of Auckland, who will need accommodation.

So what does that mean for Auckland's property market, at a time when syndicates are already hunting for high-end accommodation for teams competing in the 2021 America's Cup in the city? Could we soon be seeing queues of hobbits and yachties outside rental homes?

Hunt for luxury apartments

OneRoof editor Owen Vaughan says Lord of the Rings show should boost demand for property in Auckland. “The leading cast members and crew will want to live in the best parts of town. Amazon may also decide that it's cheaper to buy than rent, so waterfront suburbs such as Herne Bay may see more inquiry,” he says.

“While $1.5-million-plus market has been sluggish over the last 12 months, agents are now reporting new activity in Remuera and Ponsonby. The Rings show could add to that momentum.

“There could also be flow-on effects for West Auckland's housing market, as the bulk of the production crew may wish to live close to the studios.”

Property management firm Goodwins, which is already sourcing properties in the Viaduct, St Marys Bays, Parnell and Grey Lynn for the America's Cup challenger team American Magic, revealed it was working with a number of film production companies to find accommodation but it would not confirm if the Lord of the Rings show was one of them.

Chief executive Catherine Goodwin says their clients are looking for thousands of properties in Auckland Central and Western Bays. “It's extremely positive because it's not putting a squeeze on the market. [Our clients] are looking for a specific product - not standard residential but fully furnished executive homes,” she says.

She encourages Aucklanders with the right type of properties to consider renting out their homes. “Homeowners can use the opportunity to travel or if they have another property, live in that during the period their main home is rented,” Goodwin says.

Skipper Peter Burling

Skipper Peter Burling, centre, on board the Emirates Team New Zealand America's Cup AC75 yacht Te Aihe.

Samantha Arnold, Barfoot & Thompson’s property management general manager, says the real estate agency has been fielding enquiries about housing film crews and is already working with America’s Cup teams for the start of training. Each team is generally looking for 50 to 70 homes for team crew, or up to 150 if the sponsor companies are also locating people in Auckland.

“They are all wanting apartments close to the Viaduct team bases,” she says. “International families with children are used to apartment living and walking places.”

Arnold says some property buyers are deliberately targeting the Viaduct in anticipation of renting out apartments to Cup teams. She points out that with lower property prices and higher rental yields in Auckland’s west, where the studios are located, may spur investor activity there.

“Some of the beach areas, Piha and the like, and the more luxurious country properties, or Titirangi could be very appealing,” she says.

Boost for premium suburbs

Real estate agents believe the Rings show and the America's Cup will also give the top end of the market a much-needed lift. Michael Boulgaris, of Boulgaris Realty, says: “If the rental market is slow, the sales market is slow. There's a good possibility there'll be increased activity.”

Bayleys sales agent Chris Bachelor says inner-city suburbs such as Ponsonby and Herne Bay are likely to benefit most. Both are popular with overseas visitors as they are close to the city and prime shopping and eating spots while still offering peace and quiet, he says.

“There’s probably not enough rental stock available at the moment but there are a lot of numbers coming through the open homes,” he says.

Last year, Graham Wall Real Estate said it had secured what it thought was the first America's Cup property deal with a $7 million Herne Bay sale.

Gower Buchanan, managing director of the Ray White Damerell Group, which operates in Ponsonby, Grey Lynn and Herne Bay, says demand for good housing across Auckland "will increase due to the influx of capital and people into the city". The development of the City Rail Link, which due to be completed by 2024, will lift the market by increasing access to the central city and making housing outside of the central city suburbs more viable.

"The CRL will offset some of the potential for increases in rental rates in the central city- contributing to vibrancy across Auckland," he says.

The International

The International: One of the luxury apartment developments Rings crew could target.

New Zealand Sotheby’s International Realty agent Ross Hawkins says that when the Lord of the Rings movies were in Queenstown Lakes some crew members bought homes, which “helped the market considerably”.

“There were quite a lot of purchases made to Americans and off-shore people who were involved and they still own places there,” he says.

Several luxury apartment towers are due to come on stream in Auckland CBD and could be a possible target for leading members of the production. Hawkins says there are still apartments available in the $200m International, but he believes the show “is more going to help the high-end rental market as much as anything”.

Hawkins says Amazon had not yet contacted Sotheby’s, which is already helping Americas’ Cup organisers find suitable rental properties. “It’s quite a challenge to find the right location because they do want to be close to the city and the Viaduct," he says, adding that both the show and the Cup will undoubtedly put pressure on the rental market as well as stimulate activity by investors.

A few years of filming will provide a stable income for property owners. “It’s good, reliable, longer-term rentals, which is more attractive to a lot of people than six months,” he says.

The Rings effect

The Rings effect should not be underestimated. In Wellington, when Jackson was filming the Lord of the Rings and Hobbit movies at Weta Studios, there was a rush for rentals in nearby Miramar, Karaka Bay and Seatoun.

Bindi Norwell, CEO of the Real Estate Institute of New Zealand, says the median house price in Miramar increased, from $253,000 in September 1999 just before filming started, to $321,500 just after filming had begun.

"Demand for good properties outstripped supply. The same was true with the rental market as many of the crew were renting during the filming period, although due to the shortage at the time some rented as far away as the Hutt Valley," she says.

Tommy’s real estate agent Nicki Cruickshank says at the time some investors were buying properties specifically to rent to the crew. High-end homes, she says, were fetching $5000 a week. “There was nothing much under $1000 for three to four bedrooms,” she says.

Sir Peter Jackson

Sir Peter Jackson and Sir Ian McKellen filming the Hobbit in Wellington.

Norwell says Auckland’s rental and housing markets will experience a similar lift when filming on the Rings TV show starts. “Although with the America’s Cup already starting to place pressure on the rental market, there is a chance the increases in rental prices could be felt even more strongly this time,” she says.

James Wilson, head of valuation at OneRoof data partner Valocity, says it's hard to measure the direct impact of major film productions or events such as the America's Cup on housing markets as transactions are often ‘masked’ under company ownership".

“However, what can be noted is that for international events overseas attendees or participants are willing to pay premiums to secure accommodation in the right location. For the America’s Cup, luxury apartment stock in the CBD or immediate surrounding suburbs are in high demand.

“For longer-term events such as big-budget films or TV series, often production companies wish to purchase properties [for cast and crew] and may pay premiums to secure them.

He says landlords should be wary of chasing short-term rental returns, no matter how high. "Owners of such properties should always consider the longer term - is it actually worthwhile evicting existing tenants to secure a short term rental premium?

Queenstown Lakes Mayor Jim Boult says while the Rings crew will be based in Auckland a large amount of filming for the show is expected to take place in the Queenstown area.

“It will have a significant effect on rental market in this part of the world but Auckland is big enough so I don’t think it would have much effect at all. If the production team were to purchase properties, they would be in the competitive market along with other potential buyers," he says.

“There’s always pressure for buying properties here.”

Source: ONEROOF