Commercial Market Comment
Craig Edwards – Commercial Manager, NAI Harcourts Grenadier, Christchurch
Canterbury is and will continue to be a dynamic and exciting market for commercial property and business investment. Those outside Canterbury will not easily understand the impact that the earthquakes (almost nine years ago now) have had on our regional economy and commercial property market.
You cannot displace an entire CBD, then rebuild it and spend billions of dollars on housing and infrastructure repairs without some significant economic and market impacts. The stimulatory impact of the construction boom and the dramatic supply/demand fluctuations generated by it will reverberate through the market, like the shockwaves themselves, for many years and even decades to come.
For these reasons Canterbury is and will be a market with opportunities. There will be rewards in abundance for the committed and strategic investor. But it will be anything but run of the mill and most definitely not for the faint hearted.
The challenges are being felt right now. For our hospitality sector it is a perfect storm this winter as the impact of the 15 March atrocities are felt along with lower tourism arrivals due to grounded Boeing aircraft fleet and other factors. The hospitality sector is under pressure and industries are feeling it too.
But look a little further ahead. The long awaited Convention Centre, Te Pae, is due to open next year and will be like an espresso injection into Christchurch’s CBD heart worth upwards of $90million per year to the local economy. Add in Lyttelton Port’s new mega cruise ship berth with bookings already set to bring in more than 150,000 visitors in the first season alone. Our agricultural heartland continues to pump out protein to feed an ever growing global market. Meanwhile Christchurch remains the gateway to a world class South Island tourism industry with its booming 24 hour international airport.
Right now vacancy rates are up and over supply of floor space is being felt in many sectors. Rentals have taken a hit in the last few years. Investors have had to adjust as local business reap the benefits of cheaper rent and attractive lease inducements. Canterbury, now in the best shape of its life, has arguably the most cost effective accommodation and operating costs in New Zealand. I challenge other centres to compare their cost of living, cost of doing business and quality of life with Canterbury. It will be hard to match.
Supply, demand and economic growth will still be big players in the investment game ahead. But there is more to it than just supply demand economics. Canterbury’s buildings are the most quake proof in the country, tested, strengthened or newly built to a greater extent than any other city in New Zealand. But its people are resilient too. If 15 March, and our response to it, has taught us anything it's that Christchurch is an international city. We have come of age the hard way, but come of age we have. We are an inclusive, diverse and tolerant community that is both reflective and appreciative of all we have and outward looking to a changing world with empathy, ambition and optimism for the future.
Is now a good time to invest in Christchurch? Absolutely yes, but get your ECG done first then buckle up for the ride.