Queenstown’s property market will continue expanding for at least the next two to three years, an annual market report concludes.
Property consultancy Colliers International, in its local 2015 market review and outlook, says residential construction, tourism growth, commercial development on the Frankton Flats and increased investor confidence underpin this prediction.
It estimates that the total value of commercial construction projects under way or planned to commence this year will exceed $250 million.
These include public sector projects like roading on the Frankton Flats and the $25m Kawarau Falls bridge.
“Once completed, these projects could provide a further 700 to 800 jobs – it creates a pretty positive business environment,” local Colliers valuation director John Scobie says.
Those projections don’t include residential development, which is also booming.
“Construction of new housing across all value brackets continues to progress at a rapid pace,” the report says.
It predicts residential sales will continue to average 80 to 90 a month throughout the year, up from 70 to 80 last year.
“The oversupply of sections that characterised the market in 2014 has been absorbed.”
Pent-up demand means new section releases at entry-level Shotover Country and higher-priced Jack’s Point will be quickly taken up.
Colliers says several new apartment and townhouse developments, like Alta Apartments at Frankton and La Residence du Lac, below Frankton Road, are planned or underway “after a construction hiatus lasting several years”.
Those developments appear to be timely, as the report says Queenstown’s ongoing housing shortage will result in significant price gains – while the acute shortage of long-term residential rental accommodation will flow into rent increases. Frankton Flats, meanwhile, is depicted as a hive of commercial activity.
That covers projects under way like the $20m Mitre 10 Mega store, the 15,000 square metre first stage of the Five Mile shopping centre, $12m Queenstown Airport terminal extension and The Landing complex, Ramada Hotel, an office/retail building and a recreation precinct at Remarkables Park.
But the report says the finalisation of the council’s plan change 19 opens up another 60 hectares of mixed use land for development, including extra Shotover Park industrial land.
This also includes the 23ha Queenstown Central development which will provide more retail and commercial space and 600 residential units.
The report also delves into Queenstown’s tourism accommodation market.
It concludes that there’s a shortage of capacity over peak periods, and that this shortage will drive room rates higher: “Based on the continually-increasing demand for hotel rooms, hotel development sites in Queenstown represent a compelling buying opportunity.”
The report notes the council’s plan change 50 proposal to expand the Queenstown town centre, to facilitate a conference centre, increases the supply of land suitable for hotel development.
Queenstown leads the country in Colliers’ latest commercial property investor confidence survey after overtaking Auckland for the first time.
“Clearly the market is in excellent shape and has a solid base for growth through the rest of this cycle and into the future,” Scobie says.