Archives for posts with tag: Developers

They’re one of our societies most maligned groups, never asking for anything, never getting the breathless media coverage they so clearly think they deserve. But the property developers of Central Christchurch are going to the public this winter, to ask for your money to help them to realise their dreams of seeing their egos manifest in glass and concrete. Yes, that’s right – if you’re a taxpayer or a ratepayer, or even better, both! – these old, white, rich men want your money to help fund their vanity projects. That’s right, for a just the price of a cup of coffee, you could be helping one of Christchurch’s monied elite to construct the convention centre you didn’t ask for, or the retail centre you’ll never be able to afford to visit. Don’t delay, donate now!

Yesterday, as the council debated the budget, and headed towards an asset sell-off we’ve been told is a the only way to balance the books, they also found time to relieve property developers of the contributions they provide to council. This move was led – of course – by Cr Gough, the nephew of one of the main benefactors of this change, Anthony Gough:

Cr Jamie Gough, who led the push to scrap the development contributions, said effectively the council was making the central city a “DC-free zone”.

It was signalling it would “never be cheaper than it is today” to build in central Christchurch.

I’m sure Jamie knows this, so it doesn’t really need repeating, but the main reason why it is prohibitively expensive to build in central Christchurch is that the cost of land is so high, because the government used the Blueprint to buy up land and artificially limit land supply. This was what the developers wanted – but now they are complaining that the costs are too high. The Blueprint was a document that gave a small group of influential developers what they wanted (government intervention to prevent the collapse of central city land values, and thus the collapse of their property portfolios), and now they have successfully lobbied for a broke council to scrap one of their much-needed income sources.

But wait! There’s more!

Clearly feeling emboldened by the Council rolling over and letting them scratch their bellies, these brave developers are now demanding money from the Crown for delays to the Convention Centre:

City Owners Rebuild Entity (Core) spokesman Ernest Duval said the more the project was delayed, the more money would be needed. There was a natural increase in construction costs of about 8 per cent a year, he said, “It will cost more simply to build the exact same thing that was planned in 2013 because of rising construction costs.”

The government is already pouring at least $284m into something that no-one asked for and many have questioned whether we need. While there have been delays, we still haven’t seen a business case for the project. We don’t know how it’s going to operate. Instead of ploughing good money into a giant hole the size of two city blocks, it makes sense to wait. But these asshole developers know a sweet deal when they see one, and feel like they might as well try their luck at the Taxpayer ATM. For a bunch of people convinced that the free market will fix the central city, they aren’t too proud to repeatedly milk the public teat for money. These winklepickered parasites need to jump in their Maseratis and take a long drive on a long road out of this town. We will survive without them. There are plenty of good people who can rebuild this city without repeatedly blackmailing the place they’re claiming to save.

Image of one of the new car-parking megastructures planned for Christchurch’s CBD (image source: CRUDE)

In a move that has been welcomed by the frequently ignored property developer class, the Finance Minister is expected to outline plans for a new focus on housing for cars in the Christchurch CBD as he delivers his 7th budget tomorrow. The plan will finally address the dire need for more carparks in the central city, a housing crisis which the government has repeatedly denied was an issue.

While the details have yet to be announced, Rebuilding Christchurch understands that the initiative, known as the Central Road Users and Developers Entity (CRUDE), will be focused on the East Frame. Stage One will see all remaining buildings in the government-owned East Frame demolished and replaced with car parking. Stage Two will involve a state-of-the-art, 4,500-berth facility built for the protection and security of cars. Stage Three of CRUDE will involve the repurposing of “people parks”, such as Latimer Square and the Margaret Mahy Playground, into parks for cars.

After years of being ignored, central city property developers are delighted with CRUDE. “We’re finally being listened to”, says developer Tony Trough. “We’ve been telling the government for years: you can’t have a successful city without cars. Just look at some of the great cities of the world: Los Angeles, Swindon, Los Angeles, Birmingham. They all have spectacular spaghetti junctions. With CRUDE, Christchurch finally has a chance to compete on the world stage.” Trough went on to say that the rights of cars have been ignored in the rebuild. “On any given day, there will be more cars in the CBD than people. Yet what are we doing for those cars? Nothing. They have no voice. Unless you have a late-model European car like I do, which tells you to put your seatbelt on. But apart from that, they’re silent.”

People living in the quake-damaged Eastern suburbs of the city who spoke with Rebuilding Christchurch on the condition of anonymity were supportive of the idea. Shoshanna, not her real name, lives with her 3 daughters, 2 sons, husband, de-facto partner, de facto partner’s ex, de facto partner’s ex’s nephew, de facto partner’s ex’s nephew’s wife and twin daughters, a wolfhound, two cats, a guinea pig and Jason Gunn in a 3-bedroom house in the suburb of Dallington. “After the quake, my whanau had nothing. No water, no power, no place to go. So I just opened the doors and let them all come here. It was a tight fit, so some of us had to sleep in the garage. Of course, that meant that the car had to go out on the street. We just never thought about the car. It’s been out there on the street for the best part of five years now. It can’t go on. So I’m grateful that the government is finally doing something [to house the cars].”

Rebuilding Christchurch understands that CRUDE will be partially funded by a series of toll-gates for pedestrians along the perimeter of the Four Avenues. Developer Trough thinks this is only fair. “For too long, people have just been walking along the streets without paying anything at all. They walk into shops, they walk up to the windows, but they don’t pay for anything. Foot traffic is welcome, but it needs to start paying its way, like real traffic does.” When asked about cyclists, Trough was less charitable. “Everyone knows you can’t ride a bike to go shopping. It’s political correctness gone stark raving mad. There is no place for them in this city.”

Given some of the recent bad publicity about the delays to key anchor projects, the government is very keen to see CRUDE up and running as soon as possible. Stage One is expected to be complete by the time the Finance Minister has finished delivering his speech; construction companies are working double-over-time to have Stage Two completed by Queen’s Birthday, when the Queen herself is expected to open the building by ceremonially driving her Bentley through a cavalcade of homeless people. Stage Three has no concrete completion date, as the repurposing of “people parks” is an ongoing project which the government is looking to roll out across the country.

Property developers seem to be the most important people in the eyes of the government. The blueprint put them front and centre, limiting land supply to ensure that those within the frame didn’t lose value on their portfolios. The blueprint also strongly favours big developments, which has resulted in big name, big money developers taking on whole city blocks at a time. Some of these developers are relentlessly positive, such as Shaun Stockman:

His advice to people considering living in the central city is simple – “do it”.

“Enjoy the buzz of living centrally. It’s a perfect place to be for people who want an easy care lifestyle and there is something for everyone. The new city is a playground – just get stuck in!”

Something for everyone! The new city is a playground! Just get stuck in! The other developer who can usually be called upon for boosterism has a slightly different message:

High-profile property developer Antony Gough hopes offering pre-earthquake rents will lure tenants to his stalled central Christchurch precinct.

Gough, whose prime hospitality space, The Strip, was demolished after the quakes, said he would charge about $700 a square metre for hospitality space at The Terrace – “a third of what shopping malls are charging”. Hospitality NZ said Gough’s offer was generous but some developers thought it would still be too expensive for tenants.

A “few” tenants had already signed up but he would not say how many.

Demand has clearly not matched the optimistic expectations of those developing in the Cashel Mall area – this isn’t the first time that Gough’s development has stalled. While you have to admire him for pushing on regardless, the underlying economics of the situation should have alarm bells ringing at CERA HQ. As should this story from the Press:

Cristo Ltd has abandoned plans to develop the site of BNZ House in Cathedral Square, which it says is the subject of a dispute with the Canterbury Earthquake Recovery Authority (Cera), and is looking for a buyer.

The building has become an eyesore, sitting half-demolished on the southern edge of the square for more than two years while developers and businesses head west to the banks of the Avon River.

Cristo director Stephen Bell said tenants were not interested in the site, stalling development plans for a multi-storey office building. “The high-end tenants you need to make a building like that, a fairly expensive building, pay, seem to have settled elsewhere and are not really interested in coming right back into the CBD. The possibility of building offices in the centre of the city now seems quite remote.”

Most of the development happening in the CBD is being led by families with a strong connection to Christchurch. The lack of outside investment in the city has always been a problem – but now that these developer families are pulling their money out, where does that leave the wasteland of a CBD? This situation – a CBD rebuild led by a handful of prominent developers – is exactly what the government wanted when they released the blueprint. People have been arguing since 2012 that this is what would happen if they went down this track. They’ve rejected such claims. This is their mess.

Rentals for more than $400s a square metre, which Bell said were needed to make a high-rise development on the BNZ site viable, were unsustainable, [Richard] Peebles said, especially when tenants wanted to be on the west bank of the Avon River and could do so for much less.

Knight Frank director of valuation Will Blake said existing developments had largely catered for office space demand, meaning the old CBD – Cathedral Square and surrounds – “could be in for quite a long period of not much activity”.

“It certainly does look like the central city has shifted to the west and become a bit more elongated rather than just clustered around the square.”

That the city has “shifted to the west” and that people want to be on the west bank of the Avon is telling – this means the developments on Cambridge Terrace and Victoria St. These developments have flourished precisely because they are outside of the area controlled by the blueprint. There is a diminishing business case, to put it in developer-speak, for returning to the CBD. I doubt this is what CERA wanted when they released the blueprint.

The tensions between the government and the council have flared up again, for the first time under the new council. This time it stems from the obsession with a few developers for the provision of car parking, and the council’s resistance to bankroll them. Yesterday, Georgina Stylianou revealed that the earthquake recovery minister Gerry Brownlee had used his “special powers” to fast-track a car parking building for Phillip Carter, the brother of the Speaker of the House, National MP David Carter. This was followed by a chorus of down-on-their-luck property developers piping in that they too needed more car parks, and that could the government please build some for them.

The sad, bizarre situation in Christchurch right now is that there are more people lobbying for the rights of cars to sit motionless than there are trying to house human beings. I don’t believe that this is what the city asked for, through Share an Idea, but it’s what we’re going to get when the people with all the power are ageing white men for whom the keys to a luxury European car is the most important symbol of status. Even the Press is buying into their narrative, with Stylianou, one of their best reporters, jumping across into an opinion piece that could have been ghost written by the Carter Group. Never mind that here’s a story from less than a month ago about a 400-car park in the central city that sits virtually empty every day. No, the demand for carparks is so obvious and necessary that the developers and their man in charge are going to war with the council, again, to ensure that the ratepayer stumps up for the facilities that they’re too cheap to build. For the citizens of the city, they get hit twice; not only will we be lumped with these dead zones of urbanism, best suited to the 1950’s, but we’re going to pay for it too.

As happens on too many occasion’s under National’s supposedly free-market management of the economy, the risk of development in the Central City is being socialised, whilst the profit is being privatised. This understated quote from the CCC CEO describes it perfectly:

Decisions made by developers, including notably the justice precinct development by the Crown, not to provide car parking on site is creating additional pressure.

These developers are building their buildings, not factoring in enough car parking for their tenants, then going cap in hand to the council and asking them to stump up. When the council tells them to get stuffed, they turn around to their mate Gerry, who overrules the council and the developers get their way. Once again, it’s the taxpayer and the ratepayer who are left to pick up the tab.

There have been some interesting developments around housing in the last few days, which I will sum up in a future blog post. However, I did like this quote from Cr Jamie Gough, in a story about development contributions:

Gough, who in July successfully got a 100 per cent rebate on development contributions for those building within the four avenues, said a “rethink” was required.

“These are the sort of stories we don’t want to be hearing in our rebuild of the city.

We should be rolling out the red carpet and not the red tape for developers,” he said.

Yup, that is the same Jamie Gough who is the nephew of rich-lister developer Antony Gough. Good to see the Goughs working so hard to fight for those poor, downtrodden developers.

And now it’s time for our weekly update from property developers saying that things aren’t exactly rosy:

A lack of tenants to fill pricey new office buildings is a “total disaster” for the central city, a property developer says. Property developers warn buildings with “A-grade” rentals in the central business district cannot compete for tenants against cheaper, already-completed developments elsewhere. The warning comes as some developers and investors take their plans and money elsewhere in the face of high construction costs, reluctant tenants and uncertainty over car parking.

This is just the latest grumbling in the growing discontent about the (lack of) commercial development in the CBD.

Long-time Triangle Centre landlord Michael Ogilvie-Lee recently dropped his concept for a $100 million office and shopping centre between Colombo, High and Cashel streets. Others to have abandoned major plans include the McFarlane Group, which sold land between Gloucester and Armagh streets; the Goodman Group, which had approval for a $350m precinct at the Bridge of Remembrance, but did not buy the land; and Anthony Leighs, who had plans for five City Mall buildings but instead sold his land to the Government.

But it’s ok! Gerry says … relax. Apparently, a number of high-profile developers voting with their wallets and pulling hundreds of millions of dollars out of projects isn’t anything to worry about.

Canterbury Earthquake Recovery Minister Gerry Brownlee told The Press he had no concerns about the future of the CBD … “You have to be careful that the experience of one or two people doesn’t become the general view of all investors.”

If a developer who is building a top-level site, which is adjacent to the Council – and a stone’s throw from CERA, the Arts Centre and the Art Gallery – can’t find tenants, then Gerry should be worried. Instead, he’s got his head in the sand, willfully ignoring all the evidence that is dream of a castle is collapsing around him.

I spend a lot of time bagging property developers, but I don’t actually think they’re all bad. Just most of them. Anyway, here is one that goes against the grain. 

Geoff Butcher, the principal of Cooperative Sections, has secured enough land for 38 houses and has sold, or nearly sold, 29 sections so far. The nine remaining sections are mostly small – 250sqm to 350sqm – and cost about $140,000. There is one larger section left.

Not only are these sections more affordable, they embody a lot of the values that people said they wanted in a city – more compact living, green design, and community values.

Butcher has also adopted a five-star rating system that encourages homeowners to insulate well and install innovative sustainable features like solar power. Depending how many residents achieve five stars, rebates could run towards $10,000 each.

While this is only a small development – 38 sections – it would be great if this sort of idea could get off the ground.

A number of property developers in the CBD are complaining about the values which they are being offered for their properties, and may force CERA into using their powers of compulsory acquisition. This obviously isn’t the first article to cover this, but it really seems like the owners are digging in now. As some of us predicted when the blueprint was first announced, it’s given a hand up to a select few developers, whilst giving the finger to others. 

Developer Antony Gough was on the other side of the fence, urging land owners to be ”more realistic”. He said the eastern frame was ”a desert, even before the earthquakes”.

Interesting. I lived in a flat that is now going to be included in the eastern frame, and I don’t recall it being particularly desert-like. In fact, this part of the city, which Gough is so dismissive of, was much more vital and alive than the scummy run-down bars at the end of town which he lorded over. Gough is getting a sweet deal from the CCDU, as one of the developers whose property portfolio is being propped up by CERA limiting the supply of land. His encouraging people to be “more realistic” is just pure self-interest.

When you look at some of the figures being quoted in the story, you can see why these landowners might have a bit of a gripe.

Landowners say CCDU’s property group is making offers that are ”off the planet”. An independent valuation of a Lichfield St site owned by KPI Rothschild Property Group, showed the land was worth about $850,000. The CCDU valuation came back at about $275,000.

These property owners are stuck between a rock and a hard place. It will be really interesting to see what happens if they go past the CCDU deadline, and one of these cases ends up in court. 

Lisle Hood, who owns several Lichfield Lanes precinct sites, said the Government was not treating landowners in ”good faith”. ”Compulsory acquisition [followed by a legal fight] is likely to have a far better outcome for us,” Hood said.

But the whole sorry story goes to show who the government are looking after: property developers – and even, just a select few of them.