Property owners leaving town
Christchurch commercial property owners are taking their insurance cheques shopping in other cities, bearing out fears of capital flight.
One major central city landlord confirmed he was buying a building in Auckland, but did not want to be identified and "get a lot of flak for taking capital out of the city".
"We want to rebuild here but have no idea when we can get started.
"I've done the sums every day, there's no way around it. We have to be able to service debt so we are forced to buy property outside of Christchurch – no-one is prepared to commit to a lease here and we can't get insurance."
The investor said he had big mortgages and an annual rates bill of hundreds of thousands of dollars. Low interest rates meant bank deposits would not pay the bills.
"We've got no choice unless we skip the country."
Groups such as the Property Council and the Institute of Valuers have warned that fed-up investors are pulling their dollars from the city. The insurance freeze, the pace of demolitions, and the draft Central City Plan's building restrictions have been cited as frustration points.
A total of 1264 buildings, mostly commercial, are on the Canterbury Earthquake Recovery Authority's demolition list for central Christchurch.
Antony Gough, landlord and head of the Central City Business Association, said he hoped to keep his capital in Christchurch but many would struggle when their rental insurance ran out next week.
"We are going to see quite a showdown in the next couple of months. There's no progress happening in the central city now, with the inquiries everyone is running scared. We're desperate to move forward."
Gough estimated 90 per cent of building owners had rental insurance for only one year.
Fellow landlord Dean Marshall, a founder of the City Owners Rebuild Entity group, said lack of insurance for new builds and the actions of the Christchurch City Council were driving capital away.
"They [the council] just don't get it, they think all the property owners make so much money but they don't understand the numbers – they don't have a commercial reality."
Auckland commercial real estate agents say they are fielding a lot of calls from Christchurch buyers.
"There's certainly been a lot of inquiry from Christchurch investors, especially for properties in the $1 million-plus bracket," said Aaron Toresen, managing director of Knight Frank in Auckland.
"It's coming mostly from high net worth individuals, and some of them are moving all their money."
This week Toresen has been helping a central Christchurch landlord with a $5m insurance cheque to spend in Auckland. The buyer is relocating north and shifting all his capital.
"It's taking too long to get certainty ... people need to get on with their lives."
Brent McGregor, senior managing director at CBRE in Auckland, was also hearing from Christchurch investors.
"We've seen quite a few looking to invest their capital up here, although at this stage the majority of them are still working through their payout issues."
Property Council chief executive Connal Townsend said Christchurch investors removing their cash was "a worrying and dangerous thing" for the city. He had heard of Christchurch buyers looking in Australia, Auckland, Timaru, Oamaru and Dunedin.
- © Fairfax NZ News
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