Capital investor has 79 properties

Mega Landlords is a Stuff series about the country’s largest property owners, how successive governments allowed investors to gain wealth while leaving everyday Kiwis behind. Ged Cann reports.

Robert Wright owns or coowns an estimated 79 properties in Wellington. That’s the equivalent of roughly a quarter of the suburb of Owhiro Bay, or 4 per cent of Wellington Central.

He came to the attention of Stuff’s Mega Landlords investigation after Ministry of Business, Innovation and Employment (MBIE) bond data flagged an entity called Pickled Parrot Trusts owning between 51 and 200 properties.

The Companies Register shows Pickled Parrot Property Management Ltd is wholly owned by Wright, who is also the company’s sole director.

Wright’s holdings, according to publicly available property title data, include a dozen properties in Newtown, over half a dozen in Mt Victoria, and over 40 units in the Central On Willis apartment building. He is also named on a property in Canterbury.

Stuff made multiple attempts to contact Wright, and received a response from his son, Matthew Wright.

He says the family doesn’t own any ‘‘investment houses’’, and only owns multi-flat properties, apartment buildings and boarding houses.

‘‘Home buyers will not be buying multi-flat properties or boarding houses to live in, so no home buyer could be disadvantaged by our investments,’’ he says.

Stuff visited several of Wright’s properties, several of which appear to have been built as residential homes and villas, which may have been converted to multi-occupancy dwellings.

Matthew Wright blames Government efforts to curb investor demand for residential homes, via increased compliance requirements and tax costs, as the reason for house price and rental increases.

‘‘All the extra rules, taxes and compliance comes at a cost, and ultimately it is the consumer [tenant] who pays for all the Government’s initiatives.’’

He says the Reserve Bank’s quantitative easing programme that pumped $54 billion of new money into the economy contributed to skyrocketing prices.

Wright also highlights the affordable accommodation the family provided through its boarding homes, which he says provides furnishings, power, gas and wi-fi from $170 per week.

Property values in Wellington city exceeded the $1 million mark in March, according to CoreLogic, and 34 per cent of capital homes are owned by investors, according to data from property research firm Valocity.

The prices mean investors’ net worths takes another jump, but for first home buyers it means increasing exclusion from the market.

CoreLogic’s Pain and Gain Report allows for an estimate of the amount of wealth a person with about 80 properties would have amassed. It measures how much capital gain (profit) the average sale netted.

From the most recent report in May, the median profit made nationally between January and March was $315,000 – the largest gain on record and up from $291,000 at the end of 2020.

Profits on Wellington properties came out well above that, showing the highest median resale gain at $506,000.

With 79 properties in Wellington, an investor could expect the capital gain on their portfolio to be nearly $40 million, but CoreLogic chief economist Kelvin Davidson estimates it would be higher still.

He estimates a profit of $51.6m if the homes were sold, based on a mixed sample of property types including houses and apartments, and the amount of time they have been owned for – the average being nine years.

‘‘Now of course that won’t represent the experience for all people,’’ Davidson says.

‘‘But it does get some way towards reality, because it covers a mix of property and holding periods, just as you’d expect in a large and long-standing investor’s portfolio.’’

The profit an investor makes also depends on whether they held the property long enough to avoid paying tax under the brightline test. Under the bright-line, if an investor sell a residential investment property they have owned for less than 10 years they should pay income tax on the profit.

Only 10-15 per cent of investor properties are currently affected by the bright-line, according to CoreLogic sales data.

It’s a reflection of the massive amounts of money to be made in the property investing game, which has resulted in investors owning more homes than either first home buyers or single homeowners, and seen homeownership rates falling to their lowest levels since 1951.

Comparing Wright’s experience to a first home buyer’s shows the stark contrast between the fortunes of investors and

those trying to get on the ladder.

Stuff’s Housing Affordability Calculator shows a household on a median income will take over five years to save a deposit if they are able to save 30 per cent of their income every week. That saving period is up from 1.7 years in 2014.

The amount that a household will pay on their mortgage has jumped, from $798 per fortnight to $1084, and with interest rates flagged to rise, that amount is likely to go up.

Making of a mega landlord

An event description from the New Zealand Property Investors Federation (NZPIF) in 2019 provides some insights into the career of Wright, stating he began investing in the early 1980s when he purchased his first block of flats. ‘‘The building of four flats was purchased for $54,000. This property is now worth $1.3m and brings in over $82,000 in rent annually!’’ the description read.

In a YouTube clip from 2013 attached to another 2016 event, Wright describes why he likes to invest in property.

‘‘It’s something I can have some control over, and it’s a bit different to shares and trusts and what have you,’’ he says. ‘‘I just like collecting them in good areas, and they show really excellent

return, and historically, over the years, they’ve just been brilliant. I can’t stop purchasing, I just need to keep on buying more and more.’’

Improvement unlikely

Infometrics research shows the number of new consents in Wellington fell 25 per cent in the year to September compared to the previous year, while the rest of the country increased consents by the same amount.

Infometrics economist Brad Olsen says this suggests affordability is unlikely to get better in the capital in the short term. ‘‘A higher level of building

is needed in Wellington to alleviate property supply pressures, given house prices in Wellington are up 41 per cent to an average value of $1.24m.’’

In March, economist Shamubeel Eaqub said home ownership in Wellington was unattainable for first home buyers on modest incomes.

He isn’t surprised at the presence of mega landlords in the capital, or that just over a third of the region’s homes now belong to investors, because it mirrors other data showing a third of Kiwis now rent. ‘‘Some large landlords might be quite good, if they have good systems and processes in place for taking care of buildings etc. But I know that is not always the case.’’

Eaqub says the trend in declining home ownership in every age group is more a concern. ‘‘Renting in New Zealand does not give you much security of tenure, that is you may have to move more often than you want to, or security of finances – rents can rise more than general costs, or even incomes.’’

He says economic impacts could flow on if the high cost of living discourages people from living in Wellington, which could result in a brain drain of highlyskilled workers.