Problem child

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Tender timetable for Five Mile site continues troubled legacy.

Even as it goes to tender, the 31-hectare Five Mile site remains a problem child in local property circles.
Real estate firm Bayleys announced the three-week international tender process on February 19. This week the tender deadline was extended two weeks till March 27.

Local real estate sources scoffed at the original timeframe.

Three weeks is inadequate notice for an international tender, says prominent local residential developer David Broomfield.

“If there’s somebody out there wanting to do due diligence, they couldn’t possibly do it in that time.”

He’s happier with a five-week timeframe, but for an international tender “it’s still on the short side”.

The site also has “a history – that’s the problem”, he says.

Planning issues that beset the site’s former Australian owners for 13 years also dogged Christchurch developer Dave Henderson, who bought the site in 2002, allegedly for $11 million.

The 7.8ha portion west of Grant Road – much of it occupied by the excavated Hendo’s Hole – has a “special zoning” that allowed Henderson to develop a shopping centre including accommodation components.

His company Five Mile Holdings was placed in receivership by lender Hanover Finance last July.

However, the 23ha portion east of Grant Rd still has a rural general zoning.

Queenstown Lakes District Council has promoted it for mixed use development with a new arterial route on to Glenda Drive due to run along its eastern boundary.

After extensive hearings, commissioners are due to give their verdict in the second quarter of this year, but like other Frankton Flats planning issues this could remain bogged down in the appeal process.

Then there’s the question of how much the first mortgagee wants from the sale – claims on the development company amount to almost $80m.

The property’s rateable value is said to be about $37.4m but Broomfield – who won’t be a bidder – says “I’d be surprised if they got more than between $12m and $15m”.

“That’s where I see its value.”

He’s heard a group of three or four people – he won’t say whether they’re locals or not – talking about $25m: “I think they’re mad at that [figure].”

Significantly in today’s economic climate, Queenstown land development sites are not selling.

Another local developer, who won’t be identified, says it’s “good luck” the site is still vacant so a buyer’s options aren’t restricted.

An ideal buyer would be the Queenstown Airport Corporation so it could protect its valuable asset, but QAC’s owner, QLDC, has stated it’s not interested, he says.

The developer thinks other uses could be as a tertiary campus – Henderson’s original idea – or as a Silicon Valley for high-tech businesses.

The expansion of Remarkables Park on the other side of the airport might make a new Five Mile owner think twice about trying to develop more commercial space.

Bayleys Queenstown owner David Murray says although the tender was only announced on February 19, “a number of known investors both onshore and offshore were given prior notice”.

Bayleys affiliate, global company Cushman & Wakefield, had also tapped its data base.

“The vendors are investing significant money in making sure we get it out as widely as possible.

“We have absolutely no impression in any shape or form that it is anything other than a straightforward sales process.”

So does Murray know the reserve price?

“I wouldn’t have a clue. Like anybody, if the market doesn’t see it at a level which the vendors see it at, that’s their prerogative.”