Queenstown's growth a blessing and a curse
While Queenstown's house prices continue to soar, the commercial end of the property market is also picking up speed.
The town's rolling contours are part of the reason land is in short supply and after years of scarcity, zoning changes have freed up significant amounts of land for commercial, shopping and industrial use.
However, skyrocketing tourist numbers and a growing population means any new commercial land usually sells quickly, Mark Simpson, sales director of Colliers Queenstown, says.
"Obviously off the back of the growth of Queenstown's population and tourism ... comes the likes of your professional services, your trades, the construction sector, tourism services. All of those things require additional land and additional buildings and that's created demand for more space."
Simpson said that when the Queenstown Lakes District Council launched its Plan Change 19, it released over 60ha of formerly rural land, including Frankton's existing industrial area.
It has four zones including a large yard-based industrial area, the Shotover Park business and industrial area, a business zone for showrooms, and a commercial zone adjoining the 25,000 square metre Five Mile shopping centre.
Linking it all will be the four-lane Eastern Arterial Road, a much-needed bypass which will help cut traffic congestion between the airport and the main highway.
Retail-wise, Simpson says there is "zero retail" in downtown Queenstown so The Landing and the new Five Mile shopping centres have added more competition, including two supermarkets and a Mitre 10 Mega.
Five Mile's manager Eric Nauta says stage one of Five Mile is complete and work on stage two, which will double the size of the centre, began this week, with the first tenants expected to move in later this year.
"You blink and you miss it around here," he says. New plans are arising almost every month, storage space is getting harder to come by and the infrastructure is struggling to keep up.
The Landing backs onto Remarkables Park, a huge area with plans for offices, a retirement village and convention centre among other amenities.
Nearby is the new site for Wakatipu High School, Shotover Country's new primary school and The Remarkables $40m ski field redevelopment.
The first hotel built in Queenstown for five years is also taking shape at Frankton. The 59-room Ramada is expected to only slightly alleviate Queenstown's shortage of hotel beds.
A new $20m extension of Queenstown airport will allow night flights, bringing more people into the township than ever.
Land prices have risen significantly. In the largely sold out Shotover Park, values have gone from around $400-$500 square metre prior to release in 2007/8, to $700-$800sqm. The business zone is $1000sqm.
Compare that with most mature industrial parks, where industrial land averages about $400sqm, Simpson says.
"I would say that industrial land number I've given you would be the most expensive industrial land in New Zealand."
However, Simpson says Queenstown has always had "solid fundamentals".
"The way we see investors looking at Queentown is as a medium to long-term investment cycle."
"Historically, our growth has outpaced most other regions in New Zealand while the returns might be low compared to other areas of New Zealand, the growth is a lot higher and that's reasonably secure growth."
Simpson says one particularly good sign absent from other cycles is that long-term, experienced Queenstown investors are getting active in the market again.
Downtown Queenstown is tightly held, and foot traffic numbers have jumped 15 per cent in the last year, as have most measures of growth.
"If you look at all the measures that you can with visitors, whether it's entry through the airport, or visitor nights, visitor spend, all those metrics have gone up 15 to 30 per cent in the last 12 months," he says.
But the growth is not without its growing pains. Quotable Value spokeswoman Andrea Rush says timely new infrastructure is going to be a key part of the town's future and accommodation is at breaking point.
"In terms of visitor accommodation Queenstown is full. If you haven’t already booked for the winter you are going to miss out."
The town's housing shortage extends to construction, retail, service and tourism workers. NZSki, the company which runs The Remarkables skifield, has been proactive, Rush says, leasing former single working men's chalets in Cromwell to accommodate 500 to 700 staff over the ski season.
"In Canada ski resorts they have implemented solutions such as rent caps and provision of worker accommodation to deal with these issues and Queenstown may need to consider these types of options."
According to QV, home values began to rise in the Queenstown straight after the general election in 2014. They jumped from 4 per cent annual growth to 8.3 per cent in just two months.
People were reassured there would be no capital gains tax, and then interest rates fell, Rush says. Since September last year property values have been rising at an annual rate of more than 17 per cent.
A measure of the demand can be seen at the Lake Hayes and Shotover Country subdivisions, where houses initially sold between $500,000 and $550,000 but are now $750,000 to $800,000.
Rental properties have become even scarcer. Standard rent in Queenstown for a family home was between $650 and $750 per week.
So expensive has the rental market in Queenstown become, that Rush says it is now affecting prices in Cromwell and Clyde. Listings in Cromwell - just 45 minutes away - are low.
Rush believes a combination of land costs, building and compliance costs in Queenstown has become something of a perfect storm for housing developers.
"Accommodating construction workers is so expensive that you have to pay them more so they can afford to live in Queenstown while they build as the accommodation is so expensive; so it's a vicious circle."