Players differ on Christchurch CBD growth

GEORGINA STYLIANOU
Last updated 05:00 08/02/2014
Oxford Tce precinct
JOSEPH JOHNSON/Fairfax NZ

EMOTIONAL PROJECT: Developer Antony Gough says it is passion, not financial sense, that has driven his $140 million Oxford Tce precinct.

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Christchurch's top property players are painting a mixed picture of the central city - from one saying a vibrant CBD is unlikely in his lifetime to others feeling confident about the future.

As some developers battle to secure high-paying tenants in the face of rising construction costs, others blame inexperience for development failures in Christchurch's centre.

About $150 million of investment is expected to leave the central city after failed negotiations with the Government.

Earthquake Recovery Minister Gerry Brownlee recently told The Press many developers were "going gangbusters" despite reports of some projects being shelved.

The Canterbury Earthquake Recovery Authority (Cera) was asked for the names of flourishing developers and offered up Antony Gough and Nick Hunt.

Gough's $140m Oxford Tce development is the shining light of the Central Christchurch Development Unit's (CCDU) recovery plans but he has admitted his project will not make him any money.

The flamboyant developer said The Terrace precinct would cost $5m more to build than it would be worth complete.

"None of the projects stack up financially. That's why we don't see developers rushing into Christchurch," Gough said.

Construction work on Hunt's Cashel St office and shopping development started recently.

Earlier this year, he said he was struggling to secure tenants because the rents needed to fund construction costs were too high but this week he was "confident the new CBD will take off".

There was a lot of interest from prospective tenants, Hunt said.

The Press understands his site will house civil servants as part of the Government's vow to relocate 1700 public sector workers to the core CBD.

Hunt could not confirm this but said he was glad his project was under way.

Brownlee said yesterday he had "huge respect for the people making substantial investments" but did not doubt some investment mistakes were being made.

Richard Diver, whose company Countrywide Property has almost singlehandedly redeveloped Victoria St, said flash buildings were being bankrolled with the help of insurance payouts but he expected several investors would "end up going bust".

The Government's announcement to relocate civil servants was merely a way of "falsely creating a booming CBD", he said.

"I'm 48 and I don't think I will see a vibrant central city in my lifetime," Diver said.

Cristo Ltd director Stephen Bell, owner of the former BNZ House in Cathedral Sq, said the company was looking to sell up.

The site was among the preferred locations for Government tenants but Bell said negotiations had failed.

Tenants did not want to pay more than $400 per square metre but building under that price was difficult.

"I'm bitterly disappointed," Bell said.

"We were planning to spend up large - about $150m in investment - but now we're down to nothing."

Cristo had bought a site on Lincoln Rd because "that's where it's happening".

Richard Peebles lost his central city land to the CCDU's blueprint and said he was not interested in developing in the new core at this stage.

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"I'm one of the culprits doing everything on the fringe because it's easier and tenants don't want to be the first cab off the rank in the centre of the CBD," he said.

The anchor projects would trigger development but the "CBD has already been established in the Durham-Victoria St area", Peebles said.

Ernest Duval, developer and frontman of the Central Owners Rebuild Entity group, said the recovery blueprint had caused uncertainty because of anchor project timelines, demolitions and compulsory acquisitions.

"Investment and development have moved out of the city and we're reaching a point where take-up of new office space and buildings is slowing down."

The outskirts of the city would "continue to challenge the primacy of the CBD", he said.

Colliers general manager Jonathan Lyttle expected more developers would begin designing cheaper buildings using the "ample earthquake code" to attract tenants.

His company was seeing a "huge amount of pre-commitment in the core" and there was unprecedented retail and hospitality demand.

KPI Rothschild Property Group director Shaun Stockman said the group's latest development - the Strange's building on High St - was fully tenanted despite no expense being spared on its construction.

The Government's tenancies would spark further development, he said.

"If you fast-forward a couple of years it will be a very different core . . . and it will be exciting," Stockman said.

- Canterbury

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