A new report offers hope for the Queenstown economy despite the gloomy state of the international financial environment.
Colliers International argues the resort is well-placed for the future because it has continued growing in the face of the global economic crisis.
The conclusion comes in the property consultancy’s “Queenstown Market Overview 2010-2011” being launched tomorrow.
“The Queenstown area continues to grow in the face of a difficult economic environment, which puts the market in a strong position to grow as domestic and international economies recover,” the report states.
“This year we see some very positive indicators towards a faster rate of recovery for the Queenstown economy and property market.”
Examples at Frankton Flats are the $50 million stage one of the Five Mile shopping centre, $24m of airport work over the next two years, the final stage of the Remarkables Park retail development and rezoned commercial and industrial land.
The report also cites that Queenstown Lakes District Council is budgeting to spend about $42m on infrastructure, building consents have risen $30m last year, there’s upward pressure on CBD ground-floor rentals and also continued high growth in the resort’s permanent and visitor populations.
“All of that stuff leads to economic growth even though it’s been a bloody tough time”, local Colliers sales broker Mark Simpson says.
“We’ve been smacked over the knuckles on a couple of big development projects but that doesn’t reflect the nature of our economy as a whole.”
Simpson’s colleague John Scobie also says low land, funding and construction costs – assuming builders are available – are encouraging house construction.
But the report also touches on the low volume of residential property sales.
Sales last year were about 50 per cent of those recorded in the peak years of 2002 and 2003.
Some apartments were now selling at 50 per cent of prices achieved a few years ago.
The report predicts managed apartment returns will fall further.
But there should be “a small increase” in total sales levels, it says, with investors re-entering the market due to
lower prices, lower funding costs and clearer Government policies.
“Encouraging signs are starting to emerge out of Auckland with investor confidence returning for good quality investment property, which we anticipate will flow through to our market this year.”
In the accommodation sector, the report notes an average five per cent increase in occupancy and yields.
But for the first time in years the budget sector shows a small decline, blamed on new supply, especially the 390-bed Nomads hostel.
With key events throughout the year, including the Rugby World Cup, “the next 12 months will show a solid improvement across the board”.