​ Fletcher invests tens of millions on prefab housing factory

Sep 17, 2018 | News

The plant will initially be capable of pre-building some 500 homes a year, with capacity to grow output quickly to 1,000 homes annually, Fletcher Living chief executive Steve Evans told BusinessDesk.

KiwiBuild aims to build 100,000 affordable homes during the next decade. While Fletcher is keen to be involved, it isn’t planning to be a sole supplier and only a third of the new plant’s output may go to KiwiBuild projects, Evans said.

“We are very interested in participating and we’ve made our feelings known to the government”.

The KiwiBuild secretariat released an Invitation to Participate (ITP) document last month, seeking proposals for investment in prefabricated housing factories.

The New Zealand Superannuation Fund also appears likely to lodge a proposal. Chief executive Matt Whineray told BusinessDesk in a recent interview that the sovereign pension fund had been “doing quite a lot of work about where the opportunity might sit in that spectrum.”

Any investment in a pre-fab housing factory needed to stack up commercially, he said.

“We haven’t landed on where we are with that, but owning land and developing homes on it is one type of risk,” said Whineray, referring to the Super Fund’s involvement in housing development at Hobsonville, in west Auckland. “Owning a factory that produces homes that can go on that land: that’s a quite different type of risk.”

Discussion of the Super Fund investing in a central North Island prefab housing factory first emerged in official papers sighted by BusinessDesk earlier this year.

“What sort of pipeline do you need to be able to invest in that type of factory? People have talked about the scale, about what number of houses per year do you need to warrant investment in the factory? That’s several thousand,” Whineray said.

“So that says: what’s the pipeline over a number of years to spend X million dollars to bring this technology in and establishing the factory and getting all the suppliers and sourcing? We haven’t really established that that’s the way for us to go.”

Both Evans and Whineray stressed that low-cost home construction was only part of the puzzle. Access to sufficient land at an appropriate price is also key.

Fletcher aspires to be a “key player” delivering KiwiBuild homes, but the challenge for the programme will be finding enough land, Evans said.

“So we will still be doing our own open market housing. We wouldn’t want to rely 100 percent on supplying to KiwiBuild.”

He noted the company was sufficiently confident of demand for panelised, pre-constructed homes to have ordered the equipment for the first phase of the factory development. There was enough land at its planned South Auckland site to double capacity as demand allowed.

The plant will specialise in two-storey duplex and terraced homes. They will be constructed over 22 weeks in the factory and then erected on-site within a single day, with all wall plumbing and electrical wiring already fitted in a weathertight frame. That can then be customised both inside and out with customers’ preferred colour schemes, claddings, and choices of about a dozen different internal layouts.

Evans said the company had worked extensively with Auckland Council on an “accelerated permissions pathway” over the past 18 months.

While homes produced in the current “pilot phase” are likely to cost about the same as a house constructed using normal, on-site building techniques, those building, transport and other costs are expected to fall over time.

Fletcher will supply its own developments in the early stages before starting to supply other customers once it had perfected its systems, Evans said.

“In a year’s time, I expect we will be producing hundreds of homes, a couple of homes each day.”

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