Chch investors seize chance, take on risk

LIZ MCDONALD
Last updated 06:41 30/01/2013

A popular rebuild blueprint, a marked decrease in seismic activity and an optimistic, forward-looking population means central Christchurch is ripe for investment.

But an expected cascade of overseas dollars into the city has not yet eventuated. Instead, an analysis of post-earthquake transactions reveals it is Christchurch investors, particularly the old guard, who are holding on to or snapping up the land inside the city's four avenues.

Today, The Press maps the central city, noting the owners of sites in every block and plans for it.

Development opportunities in a city being rebuilt may abound, and post-quake transactions have gathered speed since the release of the Government's rebuild blueprint, but without certainties of timing or outcome, buyers are taking a leap of faith.

Buying land in central Christchurch after the quakes is a game for the well-funded, patient and strong-hearted. And right now, it is locals who are rolling the dice.

Commercial real estate agents believe it will take the mega-projects - those worth tens or hundreds of millions of dollars - to attract overseas investors who are looking but not yet buying.

"We've yet to see any significant players come from out of town. It's very much a locally driven market," says Will Blake, head valuer at Knight Frank, while real estate boss Hamish Doig, of Colliers, says a "hell of a lot of local cash" has been created.

CBRE head Mark Macauley agrees it is "just the local guys; there's no foreign money rushing at us".

Out-of-town interests want big returns and an easy market that Christchurch is not offering, he says.

Canterbury Earthquake Recovery Authority (Cera) chief executive Roger Sutton last night told The Press that local investment brought confidence to the rebuild.

"The local investors know the market and are leading the way for the key international investors to follow," he said.

In the central city, most transactions are being funded by insurance settlements on wrecked buildings or government payouts for sites designated for anchor projects.

Replacement values have been as much as double the market value of buildings lost, allowing investors to pay off debt and buy more land with the profit.

Land buyers outside the inner-city red-zone cordon have included developers ready to go, such as Richard Diver in Victoria St, Richard Peebles around the fringes south, east and west, and Lindsay O'Donnell in Gloucester St.

A lot of sales action has been just west of the Avon River, around Victoria St and east of Madras St, and car dealers evicted from the south frame are buying replacement sites between Moorhouse Ave and St Asaph St.

Inside the cordon, it is a different story.

Buyers are owner-occupiers needing a new base or established and experienced Christchurch investors who can afford to sit on land while plans for the city are fleshed out. They include longstanding landlords Philip Carter, Antony Gough and Nick Hunt, plus family group Cristo Ltd, all expanding existing portfolios with major purchases.

With few details for the anchor projects, little working infrastructure and only vague time frames on offer, it is a game of patience that carries risk for the red-zone investors.

However, people could miss out if they hold back in a central city halved by the green frame, and years of low interest rates have left property investors with little enthusiasm for bank deposits.

The repositioning is described by Doig as "a jostling for position".

Sales are "accelerating at a rate of knots as people get anxious that they have left their decision too long", he says.

Blake has counted about 45 bare-land sales in recent months - what he calls "a very high level of activity" - while realtor Campbell Taylor, of Knight Frank, expects many more as owners receive insurance cheques.

Sellers have mostly been owners of smaller properties with flattened buildings. Spooked by facing the notoriously high-risk business of property development, many have opted to sell.

Land values have been tossed around by the quakes and seem to be set mainly by the keenness of buyer and seller in each case to transact.

They have been described variously as "a nightmare to establish", "all over the place" and "a moveable feast".

Some high-priced deals are expected as developers pay premiums to secure final jigsaw pieces.

Colliers leasing head Jonathan Lyttle says developers battling over the City Mall have already had a "hydraulic" effect on values there.

On the other hand, developer Angus McFarlane estimates that the blueprint designations have halved the value of his holdings.

Estimated values of a square metre of inner-city land vary from $4000 facing the City Mall and $3500 around the convention centre site to $700 a few blocks further east.

Everyone seems to agree there has been a divergence of opinion on values, especially between the Government's valuers and those with land under designation.

It just depends who is paying, and why.

- © Fairfax NZ News

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