A Queenstown property consultancy expects the local real estate boom to continue for two to three years despite approaching historic highs.
Colliers International Queenstown, in its 2016 market review and outlook report, says the boom’s fuelled by exceptional tourism and population growth, low interest rates, a shortage of residential accommodation and residential rental growth driving investor returns.
Local Colliers valuation director John Scobie says: “We’re likely to see the Queenstown property market continue to climb over the short to medium term, unless there is a major unforeseen market shock.”
Colliers says economic growth is being helped by $400 million worth of residential and commercial construction under way, with even more forecast over the next two to three years.
It notes Shotover Country has delivered 600 sections into the market over the past three years but says further sections and houses are still required.
Scobie observes that there’s lots of appropriately-zoned housing land but it’s not being brought to market.
“There’s a lot in the pipeline but it’s just not happening in the immediate future.
There’s also provision for up to 2165 lots at Hanley Downs, beside Jack’s Point, but the plan change approving them has been appealed.
In a media release, Colliers states the supply and demand imbalance is driving up residential rentals for long-term accommodation and lifting the value of real estate.
Emerging speculative activity is also pushing up prices.
However, it warns: “The downside to growth is increasing land and construction costs, and competition for housing is pricing many people out of the market, leading to the well-documented housing crisis.”
The report adds: “Compounding the problem is renting via Airbnb and similar online booking sites.
“Homes which were previously long-term rentals are now being advertised as short-term visitor accommodation online.”
Staged releases of new housing projects, Colliers suggests, are unlikely to alleviate the pressure on prices.
The Colliers report also says the visitor accommodation sector faces a crisis.
Peak months are now at 100 per cent occupancy, with shoulder seasons also enjoying increased occupancy levels, it says.
Tariffs have lifted on the back of increased demand.
Backpacker bed rates have lifted by more than 20 per cent over the past 12 months, the report says, with long-term workers competing for beds in some hostels.
Queenstown’s desperate for more hotel and motel rooms, Colliers states.
The Ramada at Remarkables Park is adding 48 hotel rooms and 12 apartments and the newly-announced Wyndham will add 81 hotel apartments.
“But with an estimated additional 300 new rooms needed annually to meet projected growing demand, the current response is well short of market demand.”
Scobie says about 13 development sites have sold in the past two years, with new hotels likely to be built on some of those in the medium term. He sounds a warning, however.
“With accommodation and infrastructure in Queenstown bursting at the seams, questions need to be asked around how many tourists are too many.
“There is a critical balance between attracting more and more tourists and residents, and making sure our infrastructure and accessibility can cope with this unprecedented growth.”