She wants to build affordable, spacious and private apartments for the masses – except the first lot of units she’s selling start at $2.9 million. Annelies Powell talks to Reweti Kohere about how Silicon Valley inspired her property development plans.
Annelies Powell wants to build the quarter-acre dream in the sky: apartments that offer homeowners just as much space and privacy as townhouses do, that are better for the environment and that everyone can afford.
But Powell, a co-founder of property-tech startup DreamSpace, is starting with units priced from $2.9m that are being sold by luxury real estate agency New Zealand Sotheby’s International Realty. The irony isn’t lost on her.
“We’re not idiots,” she says. “There’s absolutely no way you can look at them and say ‘Hey, that’s affordable’. That’s not affordable.”
We’ve heard those stories about the outrageous prices that real estate is fetching – recently, a property in Māngere East sold for $2.3m and real estate agents in the South Auckland suburb are regularly witnessing sales above $1m. Some of us are in the thick of it, growing disheartened with every unsuccessful bid, offer or application while others take advantage of the financial leg-up their families can provide.
It’s a similar story on the North Shore, where the median house price in October was near $1.5m. Given those already eye-watering prices, DreamSpace’s plans for six multi-million-dollar apartments on Lake Rd, Takapuna don’t seem out of place – except when viewed against its stated aim of building affordable housing. But Powell says the Takapuna project, which she calls “slow, bespoke, expensive”, will act as a launch pad for more projects if the company can generate momentum, and if they can get the numbers right.
“If we were to build 10 buildings in one city, or 100 DreamSpace buildings across the country, what would that mean in terms of the price point we can get to? And how do we kind of make this more affordable to people?”
Having looked to electric vehicle manufacturer Tesla for inspiration, the 30-year-old industrial designer by trade believes she has an answer. The housing crisis can be attributed to a “ferociously difficult” supply and demand equation that is forcing people to downsize, downgrade or “get the hell out of town”, says Powell. The need to cut carbon emissions to zero as fast as possible is another daunting challenge.
“By virtue of things being sustainable, [housing is] going to have to be affordable to the masses or otherwise there’s just going to be this part of the market that can never afford it.”
Enter Tesla, which for the past decade has helped accelerate a global movement towards more sustainable, electricity-powered transport. It began with a low-volume, high-cost position with its first model, the 2008 Roadster, which cost in excess of US$100,000. However, now the EV manufacturer is ramping up production across several models, including the lower-cost Tesla S and Tesla 3, to meet growing demand worldwide. In June 2021, the Tesla 3 became the first electric car to pass one million global sales and so far this year it has delivered more than 620,000 vehicles to customers, although global supply chain snags caused by Covid-19 have dented factory output. Billionaire chief executive Elon Musk has mooted an even cheaper and more compact hatchback model as soon as 2023.
DreamSpace wants to pursue a similar trajectory. The $2.9m apartments destined for Lake Rd are like the Tesla Roadsters, says Powell. The maiden block of six apartments will be minutes away from Takapuna Beach, with the upper floors enjoying views of the Hauraki Gulf and Rangitoto Island. The units, ranging from 149sqm to 353sqm, will feature open plan living, up to three bedrooms and balconies, and courtyards filled with plants and trees. The “sky penthouse” is being billed as the “super yacht of New Zealand luxury real estate”.
But one building is not enough, and DreamSpace must prove that its vision of apartment living is an attractive, affordable alternative for all kinds of New Zealanders, including families. To address this, potential buyers can experience what the company claims is a first for any real estate project in the country: a virtual, 360-degree showroom full of projected 3D renders, imagery and surround sound showing what a DreamSpace apartment will be like.
“You get to feel like you’re walking around inside the building – ‘Woah, there’s the window seat over there’, ‘oh my God, that’s the sunny little nook that I would have my cup of tea on’ or ‘that’s the cool fireplace where I’d have a glass of wine at the end of the day’,” Powell says. “It lays this experience out for you in this cool room, and it’s not like a goofy VR [virtual reality] headset, which turns a lot of people off.”
Powell is fixated on technology. She remembers being obsessed with the early-generation Apple iPod she shared with her younger brother, and buying her first (secondhand) iPhone when she was 18. The revolutionary smartphone demonstrated to her how well-designed products can transform the way people interact with the world.
Powell wants DreamSpace to do the same. Crucial to the company’s ability to make high-density housing affordable is its repeatable plans and specifications, she says. The skeleton of each new complex, made from cross-laminated mass timber instead of concrete and steel – and saving 162 tonnes of carbon dioxide emissions per complex as a result, Powell says – will be kept more or less the same, save for some cosmetic tweaks or minor adjustments to comply with local bylaws. With faster council sign-off, construction can start much sooner than is usual in the often glacially slow world of property development.
The plan is that such efficiencies will allow for high-volume, low-cost apartment buildings at scale and pace. The Takapuna development is expected to take 15 months to build, with construction starting in 2022. But with DreamSpace potentially improving and refining its product and timeframes with every new build, future projects could take mere months to complete. “This is more like how the tech industry works – they pump something out, they refine it, they send out that code again, they send it out like the next day or week or month,” Powell says. “And Dreamspace wants to take that ethos on.”
“We’re always trying to learn from the tech industry. The housing industry hasn’t told us how to do this.”
Powell first noticed the dire state of property development while living in Tāmaki Makaurau in 2012, when every new development seemed built to “make money, not to make people’s lives better”.
“When I looked at housing, I was like ‘This industry is stuffed,” she says.
She registered DreamSpace as a company in October 2014 and parked it while pursuing another venture. After a stint overseas, she returned to Aotearoa in 2019 and picked up where she left off, then went “balls to the wall” on her plan to change property development – a goal she believes is too important to fail. She brought on co-founder Martin Hebler, also 30, and raised over $1m in seed money from friends and family, including from Powell’s eldest brother, James, a co-founder of Dawn Aerospace, a hi-tech startup delivering hardware to outer space.
Some property developers have been supportive of DreamSpace’s ambitions and shared with Powell their experiences with repeatable housing. Others have told her she’s dreaming. “Like, ‘You can’t change the industry, it’s always going to be expensive’, ‘What are you, stupid? We’ve been here for ages, it’s not getting cheaper’. Not all developers but certainly some have just been like ‘Good luck, go on, give it a try. This is way harder than you think’.”
Asked what he thinks of the DreamSpace idea, AUT construction professor John Tookey comes down on the “way harder than you think” side of the equation. The company is talking the right language, he says, but it will need to overcome the many interconnected issues making housing a complex problem to solve. “The market is a fickle thing at the moment and there’s just so many different moving parts associated with the market that it’s very, very hard to be in a position where you can see these sorts of initiatives going a long way.”
He stresses it’s not all doom and gloom. Driving down prices by building at scale is possible, but New Zealand has historically reacted to demand rather than preempting it with a surplus of properties. Tookey says the government is realistically the only player big enough and with deep enough pockets to get high volumes of housing built within a given timeframe and at a specific location. The problem: doing that would drive down surrounding property valuations, devaluing the largest single asset many New Zealanders own and, in many cases, use to fund their retirements. “It’s like turkeys voting for Christmas,” says Tookey.
It’s possible that property developers like DreamSpace could help build the necessary surplus of homes, but Tookey points to the “hideously short” global supply of construction materials, and the fact that New Zealand houses are built with imported materials, as another reality check on such ambitions. Meanwhile, Covid-19 has hampered construction across the country. Tookey says as many as eight weeks of production has been lost in Auckland because of the most recent delta lockdown, meaning the city, if not the entire country, is running to try and catch up while also needing to get ahead of an increasing deficit of houses.
The “quarter-acre dream” properties in the future will need to be built in quarter of the space, and redefining what is meant by high-density housing will be key. “We need to think less in terms of bespoke, one-of-a-kind housing [and] think more about getting high-quality, low-waste, efficient building taking place, probably in a high-volume format using off-site manufacturing components. And it’s got to be done in a way which is in harmony with the aspiration of that quarter-acre living experience,” says Tookey.
“That sounds like a tall order. It is achievable though, but we’re going to have to be smart about how we achieve that going forward.”
Should DreamSpace succeed in Auckland, cities in the rest of the country will be next. Then it’s the world’s turn. Enquiries have already been made in Melbourne, says Powell, and highly unaffordable cities like Sydney, Los Angeles, Toronto and Vancouver could follow suit. “It’s almost painfully ambitious to want to even try to solve New Zealand’s housing crisis, let alone solve a global housing crisis,” she says. “But if DreamSpace nails what we’re doing, we want to help encourage an entire industry to shift.”
It’s a shift toward affordable housing that starts with $2.9m luxury apartments in slow, bespoke and expensive Takapuna. It’s up to DreamSpace to increase the affordability of its offering, says Powell, and she’s confident it can pull it off.
“We need the Tesla revolution for housing. The world needs something where the future is way more exciting than the past.”