NZ Government underwrites the Wellington Racing Club for $10m+...well not quite...

[Chief Stipe]

Crown backs $11.7m of racecourse-edge project with underwrite

Four new contracts brings the total number of agreements to nine, with 690 homes backed for a total $165.9 million

by Alice Peacock18/11/2025

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Stage 9D of Trackside, the final phase of the Gillies Group's Wallaceville Estate development. Photo: Gillies Group

 

The group behind a residential development in Upper Hutt says the backing it received from the Government was “indispensible” in enabling them to start building.https://bitofayarn.com

Gillies Group is one of four developers to receive a residential development underwrite agreement in the latest round of Ministry of Housing and Urban Development contracts. The pre-sales commitment from the Crown to bail out developers unable to sell homes helps them secure bank finance for consented, costed and ready-to-commence projects. https://bitofayarn.com

The Ministry of Housing and Urban Development’s Charles Mabbett says the four latest developments to be approved will deliver around 270 homes. The four agreements bring the number of residential development underwrites to nine, with the value of the contracts for 690 homes totalling $165.9 million. 

 

The limited-time initiative was introduced in October 2024, intended to support the residential development sector while the economy recovers by offering a financing bridge to successful applicants.https://bitofayarn.com

A total 53 applications have been received, 25 of which are not progressing due to ineligibility or failure to pass the Government’s assessment process. https://bitofayarn.com

The ministry agrees to purchase the underwritten dwellings in the case that the developer is unable to sell them on the open market after an agreed marketing period. The ‘underwrite price’ is lower than market value.

Trackside is the final phase of Gillies Group’s Wallaceville Estate. It comprises 64 lots in a greenfield development integrating parks and bush into a residential setting and flanked at either side by train stations. The homes are a mix of two-, three- and four-bedroom houses and units.

Sales manager Jamie Gillies says the underwrite supports the 30 homes that make up stage 9C. Earthworks are complete and building is underway, with five homes pre-sold. 

Stage 9D – the other section of the Trackside development – was built first and all but one of the 34 homes are sold. Stages A and B targeted first home buyers and were part of the KiwiBuild scheme.https://bitofayarn.com

 

Gillies Group is “well underway” in having the rest of them sold without the Government having to act on its underwrite, but Gillies says this doesn’t mean the backing agreement wasn’t a crucial aspect to get it started. 

“Given the timing of when the underwrite was available, it was indispensable. It allowed us to start that development when we wouldn’t have otherwise been able.https://bitofayarn.com

“That was because of bank funding; they’re requiring you to get so many pre-sales before starting. It allowed us to go to the bank with 20 pre-sales underwritten for 20 of the houses, albeit at significantly reduced rates than what you’d normally sell them for, and say to the bank: ‘Look, worst-case scenario we’ve got the residential development underwrite behind us’.

“So that allowed us to get the funding to get on and start the building.”

Gillies notes it’s a lot easier to get funding now than it was 18 months ago. The market is much smaller for homes built off the plan because most people buying a home to live in don’t want to wait up to two years for a house to be built. Buyers are typically speculators and investors.https://bitofayarn.com

“This programme has done exactly what it was supposed to do, which was to bridge the gap between a market that had fallen … and stabilisation. Getting confidence and financing from the banks and third party lenders was at that point really difficult.

 

“In a market where there was no building going on, it’s kept a lot of families employed. So it’s been a win-win for everybody.”

Mabbett, from the ministry, says the residential development underwrite supports developments that align with local market demand and have a low risk of the underwrite being triggered. If it is triggered, homes could be sold to community housing providers, iwi or sold to the open market.

“Developers with eligible projects are welcome to apply for an underwrite. Each eligible application is assessed against the residential development underwrite’s objectives and assessment framework. The highest-scoring applications progress. We expect to make further underwrites as eligible applications are received and processed.”

The three other successful applicants in the latest round of underwrites includes CG Waimarie Limited, which is at the helm of the Waimarie development in St Heliers, Auckland; Modus Group, which delivers medium-density developments in Auckland, Christchurch and Queenstown; and a company named CS No.2 Limited.

Two of the three companies did not respond to a request for comment. The other did not wish to comment, due to concerns that advertising its Crown backing would put off prospective buyers. 

Residential development underwrites were also used for the former Labour government’s KiwiBuild scheme, which was aimed at boosting affordable housing supply for first time buyers. 

The underwrite scheme was later widened out to support stalled affordable housing developments.

[Murray Fish]

 

The speed that Housing has increased on tracks like the above! wow!  add in the likes of  Addington , Riccarton and Ellerslie and Te Rapa! wow!    you can see  the massive change when old replays are watched! 

It would be interesting to see how that income was spent?

[sarge]

Land owned by clubs that’s not critical for racing and is cashed up.

However you can only sell land once.

Many years back the then CEO of Ellerslie said that their biggest mistake was selling land versus being the landlord.

Addington is an outlier in that it’s all commercial plus they’re in a jv with others.It’s been messy and poor thus far however time will see it ultimately reap dividends.

Not many clubs own their land and few have sold well -often the symptom of committee led decisions who were risk averse. Well meaning people who in real life had zip experience in such commercial matters.

For clarity Riccarton have never owned their land. It is owned by a Trust set up in the 1800’s and proceeds of the recent sale on part of their land to Ngai Tahu gives that Trust $20m or so to then utilise.

[Special Agent]

I was always led to believe Riccarton had owned from the running rail back (south) so, the sale of the carparks by President of the time John Austin went into their coffers.  But the rest was in a Trust which various oldies I knew in my youth sat on, so the middle of the track, back straight, where the RDA and pony club was, the 2 mile walking and trotting chute, all the stables, tie up stalls, swimming pool etc.

Sarge, I am so with you on only being able to sell land once.  For me it would be an absolute last resort.

You are correct.  Not many clubs own their own land.  The number is a small one that NZTR can go after, thus the aggressive nature of their pursuit of the little guys.

[Chief Stipe]

3 hours ago, Special Agent said:

Sarge, I am so with you on only being able to sell land once.  For me it would be an absolute last resort.

Yes you can only sell land once but if it isn't producing anything and is costing more to keep then it is lead weight.  Its what you do with the realised capital that matters.

For example the Ellerslie iconic hill was only used about 10 times a year.  It may have been useful if Ellerslie was a training centre but funding a new track was a better use of that capital.

[Dark Beau]

On 20/11/2025 at 3:05 PM, Murray Fish said:

 

The speed that Housing has increased on tracks like the above! wow!  Add in the likes of  Addington , Riccarton and Ellerslie and Te Rapa! wow!   You can see  the massive change when old replays are watched! 

It would be interesting to see how that income was spent?

That's the $64 Dollar question.

Based on the stupid decisions of the RACE Board, from their Annual Report released today, it says it all, at least in relationship to them!

Idiots from start to finish [possibly everywhere] in my opinion.

[Huey]

15 hours ago, Chief Stipe said:

Yes you can only sell land once but if it isn't producing anything and is costing more to keep then it is lead weight.  Its what you do with the realised capital that matters.

For example the Ellerslie iconic hill was only used about 10 times a year.  It may have been useful if Ellerslie was a training centre but funding a new track was a better use of that capital.

Therefore under that assumption most tracks around the country should only own up to outside rail , utter madness the sale of land for profit or not it"ll be one of the biggest reasons the racing industry descends into oblivion.

[Special Agent]

19 hours ago, Chief Stipe said:

Yes you can only sell land once but if it isn't producing anything and is costing more to keep then it is lead weight.  Its what you do with the realised capital that matters.

This intrigues me somewhat.  Which tracks aren't producing anything and costing more to keep?  Are they the ones on the chopping block?

Awapuni hasn't produced a race meeting for a while and is costing way more to keep than most tracks in NZ.

On that logic Awapuni should be the first to be cashed up.

Edited 1 hour ago by Special Agent