Let the market decide

Christchurch building owners are spending their insurance money…elsewhere. Not surprisingly there are busybodies suggesting they be constrained as to where they invest and repair their shattered businesses.

Most central Christchurch property owners were not developers and would rather buy a building in Auckland than grapple with a consents hearing, tougher building standards and the ongoing shadow of possible Government intervention in Christchurch, he said.

Others simply could not afford to wait until the central city reopened in April next year, Duval said.

“It is just too difficult, even for some of the most seasoned developers.”

The draft plan had exacerbated this growing reluctance to reinvest in the city, he said. “There is billions of dollars these guys are entitled to [through insurance] and we have to keep it here.”

Duval has also been pushing Government to underwrite “reconstruction” bonds to fund the central city rebuild but the idea has not gained much traction.

Without some assistance, large swathes of central city would remain vacant lots for decades, he said.

His concerns were echoed by the Central City Business Association, which yesterday lodged a submission on the draft plan. It said the plan needed to do more to encourage developers back into central city.

Hmmm how about letting the market decide if there should be a new CDB? Some of the market already has decided:

Central Christchurch recovery is under threat as quake-weary property owners start using their insurance money to buy new buildings in Auckland and overseas.

On Friday, the 14-storey Westpac building on Cashel St was approved for demolition, the last of Miles Middleton’s four central Christchurch high-rises to be be pulled down because of quake damage.

Middleton said he wanted to rebuild in central Christchurch, but without changes to the seven-storey height restrictions in the draft central city plan, he would be forced to take his insurance money to Auckland or even Brisbane.

“A lot of people that were keen to rebuild here have gone cold,” he said.

“I would love to rebuild here but at the end of the day I don’t want to go broke.”

Even if the height restrictions were altered, Middleton said he would probably buy some buildings outside Christchurch to generate income while his Christchurch properties were rebuilt.

 


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  • Many of us with interests in Christchurch have been saying this, but central and local government are too arrogant to listen.

    From my post: http://tiny.cc/740sx

    Quote:

    Why not let the ones who will be responsible for providing ongoing insurance be responsible for the decisions around the re-build – that is, the private insurance companies. The city will be rebuilt where the insurance companies will be prepared to reinsure, and you can bet they’ll do their homework first. And yes, this includes the possibility that they may not be prepared to reinsure at all, that the city, in its previous scale and form, should not be built: the science may show – I don’t know – it is simply not wise to rebuild Christchurch – no one in government or the council seems to have even considered that option, letting themselves be led by emotion instead and a completely misplaced, plain stupid, regional bravado. If an area is unsafe to live in, well it’s stupid to live there.

    I have left Christchurch.

  • JK

    Can’t blame these people. First they had to try to deal with the quakes, then they have to try to deal with the masses of red tape thrown at them by a combined local and national government. I would pull out too in the quickest possible time. I strongly believe that Christchurch should be re-build somewhere else anyhow.

    • peterwn

      But hey! the PSA is running ads saying some more ‘red tape’ would have prevented the leaky homes crisis.

      I doubt they market tested the ads on the general public, possibly just on their members who would think they are great.

  • MarcW

    The sandal wearers are already spreading their doom on the chances of the city being rebuilt – car and inner city parking restrictions have been proposed which will pretty much stuff any interest from any developers who may have been planning to come back. Why would anyone want to start, when the first, the very first, proposals published mean it is obvious there will be a continual battle (and spending of copious cash) to be able to make a return on your investment by fighting against the city-hall tossers.

  • peterwn

    There is a vast difference between property investors and property developers which various people just do not understand (they are all ‘rich pricks’ arn’t they). A property investor faced with an unrepairable building will:
    a. collect the insurance, probably even if the indemnity payout is less than the payout for a new like for like building.
    b. sell the land as best as possible.
    The investor ill then lick his wounds and go elsewhere.

    There is another problem with property development now – obtaining finance. A significant portion of developments are done by developers who are forced to stretch things to the limit, and the climate has become that bit more hostile.

    I have already alluded to part of the solution – a property owner has the choice of collecting a lower ‘indemnity’ payout and walking, or accepting a higher ‘replacement’ payout and rebuilding ‘like for like’. The trick for Christchurch is to induce owners to rebuild by a favourable ‘plan’ environment so they can confidently utilise the extra insurance money. On the other hand it would suit the insurers if they only had to pay out the lower ‘indemnity’ amounts.

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