- Christchurch earthquakes – the fourth largest insurance event in world history
- Over 1350 buildings partly or fully demolished in the city centre since September 2010
- Christchurch rebuild estimated at NZ$30b
- Recovery process overseen by the Canterbury Earthquake Recovery Authority
- Christchurch Central Recovery Plan sets out key projects for central Christchurch, with a significant number now in the design or consenting phase
- Over NZ$90m of work completed, and NZ$300m work underway on repairs to transport, water supply and waste water systems
- New Zealand Government encouraging of international investors and suppliers working on rebuild
- Invest Christchurch provides free information and advice for potential investors
New Zealand economic outlook on upward trajectory
Both the New Zealand Treasury and the (independent) Reserve Bank of New Zealand (RBNZ) are expecting the New Zealand economy to gain momentum over the next two years.
At at March 2013, Treasury was forecasting GDP to increase by 2.9% in the March 2013-2014 year while the RBNZ’s forecasts are for GDP growth of between 2.5% and 3% in each of the next two years.
Building boom ahead
Most of that growth will come from the construction sector. Forecasting agency BIS Shrapnel is projecting a NZ$46b building boom in the next five years.
By far the largest contributor will be the Christchurch rebuild (estimated at NZ$30b). Other contributors are:
- high immigration (both foreign and local) into Auckland which is anticipated to lead to a housing shortage
- earthquake strengthening work in other population centres (particularly Wellington), and
- repairs to leaky buildings (Auckland, Wellington and Tauranga).
Christchurch on the launch pad
The Canterbury earthquake sequence that began on 4 September 2010 is the fourth largest insurance event in world history. The earthquakes have caused immense damage to Christchurch – New Zealand’s second largest city – particularly in the central business district (CBD).
Recovery work has been complicated by the ongoing seismic activity and the need for detailed geotechnical investigations. But it is more than nine months since the last earthquake above magnitude 5, and the rebuild of the Christchurch CBD is cleared for take-off.
Most of the 70% of buildings in the CBD that were earmarked for demolition have been demolished and the CBD “Red Zone”, the area closed to the public, has shrunk from 387 hectares to just 38 hectares and is expected to be gone entirely by the middle of this year. Recognising this progress, the Red Zone has recently been renamed the “Rebuild Zone”.
Rebuild plans well-advanced
A number of recovery plans and programmes have been published by the Christchurch City Council, the Canterbury Earthquake Recovery Authority (CERA), a Government authority overseeing the recovery process, and the Central City Development Unit (CCDU), the part of CERA focussing on the CBD.
The overarching document, “The Recovery Strategy for Greater Christchurch” was published by CERA in May 2012 (the Strategy). The Strategy is intended to guide all participants in the recovery from government, the public and private sector through to groups, clubs and individuals and to co-ordinate recovery activities. It is seen as a key milestone in the recovery and rebuilding of greater Christchurch.
The Christchurch Central Recovery Plan (the Recovery Plan) issued by the CCDU recognises that the earthquakes provide an unprecedented opportunity to “rethink, revitalise and renew central Christchurch”.
The Recovery Plan defines a number of key projects for central Christchurch including a convention centre, a cultural centre, a retail precinct, a health precinct, a justice and emergency services precinct, a performing arts precinct, sports facilities and transportation facilities which all fall within an area called “the Frame”.
The Government is in the process of acquiring properties in the Frame to facilitate these projects, some of which are intended to be fast tracked because of the foreseeable boost to the economy when they are complete. The proposed convention centre is an example of this. The Blueprint Plan in the Recovery Plan illustrates how the new CBD is intended to unfold.
A significant number of CBD projects are in the design or consenting phase. Landowners and developers are jostling for first mover advantage in the city’s rebuild.
The Stronger Christchurch Infrastructure Rebuild Team (SCRIT) – a partnership between regulatory authorities and major private sector construction companies to co-ordinate the repairs to the transport, water supply and waste water systems – has signed off on a five year forward works programme. SCRIT has completed over NZ$90m of work, has around NZ$300m of work underway and is currently invoicing NZ$1.5m a day. SCRIT anticipates that 900 new employees will be required for the infrastructure rebuild over the next 12 months.
What does all this mean?
The demand created by the imminent construction boom will create opportunities for international investors and suppliers because it will test the New Zealand industry’s capacity to supply and because the Government sees competition as the most effective way to contain price inflation.
An example of this is that the Earthquake Commission (a Government entity providing a layer of natural disaster cover for residential property) put its wallboard contract out to international tender and gave half of the US$34m contract to Knauf, a multinational which had not previously supplied wallboard to the New Zealand market. Economic Development Minister Steven Joyce welcomed Knauf setting up shop in New Zealand. He said their arrival would “provide consumers with more choice and could potentially drive down prices”.
Invest Christchurch was launched at the end of 2012 to facilitate private investment. It helps investors access information, identify opportunities and overcome regulatory hurdles. Invest Christchurch has established a dataroom providing a wealth of information on Christchurch, its challenges and opportunities. Access to the dataroom is by username and password with registration a simple process with no prequalification.
We’re here to help
Without doubt Christchurch will be a hotbed of opportunity over the next few years. The Christchurch rebuild is the single biggest construction programme in New Zealand’s history and it has significant opportunities for greenfield investment.
Chapman Tripp is the only leading New Zealand law firm with an office in Christchurch. Our local presence and national expertise makes us ideally placed to help identify lucrative commercial opportunities for you.