Recession lets Queenstown hotels off lightly

11th March 2010

Source: The Southland Times

Queenstown hotels contributed $52 million to the region's economy last year, the resort's tourism industry representatives were told at the New Zealand Hotel Council's annual operating survey presentation yesterday.

Queenstown's 20 New Zealand Hotel Council member properties generated $97 million in revenue last year, from a total of 2300 rooms, and employed 1200 people.

Council independent chair Jennie Langley said of the $52m retained locally, $28.5m was spent on wages, $7.4m on food and beverage, $7.6m on room expenses, $4.9m on utilities and waste, $3.3m on sales and marketing and $1.5m on rates and insurance.

Ms Langley said New Zealanders accounted for 37.6 per cent of all rooms sold in Queenstown, followed by Australians at 26.9 per cent.

Hoteliers around the country had been challenged by fewer international arrivals, increased last-minute bookings and the outbreak of swine flu forcing cancellations.

However, the horizon looked much brighter, especially with the Rugby World Cup, an opportunity that should be maximised next year, she said.

Economic researcher Shane Vuletich, of Covec, said although the recession had meant yields were down with fewer "high rollers" into New Zealand hotels last year, Queenstown had fared extremely well with 106,000 more Australians visiting.

Australians bought 27 per cent of hotel room nights last year – they bought 19 per cent elsewhere in New Zealand.

This had offset the drop in some traditional long haul markets, he said. Queenstown had done proportionately better attracting international tourists than elsewhere in New Zealand.

Free independent travellers (FITs) accounted for about 58 per cent of Quenstown room nights, injecting $32,000 a room a yearinto the economy which was "pretty significant", Mr Vuletich said.

"Queenstown does it well, more efficiently, you seem to get more out of your workers than some other regions, I am not suggesting you underpay, you're just more efficient," he said.

Queenstown had got away "pretty lightly" compared with the rest of the country and appeared to have emerged from the recession more quickly.

Hotel rates were likely to return to normal levels and "confidence bodes well over the next year for Queenstown", Mr Vuletich said.

ROOM AT THE INN

Queenstown hotels had come through a difficult year better than most, achieving: 5th highest annual occupancy rate in NZ at 63 per cent; 4th out of eight NZ regions for average room rate at $132.70; Average room rate equalled 3.3 per cent less than 2008, but national drop was 5.7 per cent

Pacific Blue announces direct Brisbane-Queenstown flights

5th March 2010

Source: voxy.co.nz

Pacific Blue will be flying Queensland skiers straight to the slopes this winter with two direct flights a week from Brisbane to New Zealand's ski capital of Queenstown from the end of June.

The seasonal flights on Fridays and Sundays will double Pacific Blue's international services into the winter resort, which are currently two flights a week from Sydney.

The Brisbane-Queenstown flights will begin on 25 June and the last seasonal service will be on 12 September, providing a total of 22 return ski flights and adding over 3,000 seats to the Queenstown market from Australia.

To celebrate the new services the airline is inviting Queensland snow bunnies to hop aboard early with internet sale fares available now from just AU$249* one-way, available until midnight 11 March or sold out. Regular lead-in internet fares will start at AU$289* one-way.

Queenstown-Brisbane fares are also on sale today for the seasonal services at NZ$249* one-way, available now until midnight 11 March or sold out. Regular lead-in fares start at NZ$289* one-way.

Pacific Blue CEO Mark Pitt said that many Queensland skiers were already using the airline's services to Christchurch and then driving to Queenstown. "These seasonal services will give Queenslanders a low fare, direct option to enjoy the ski fields in Queenstown and in nearby Wanaka."

Despite considerable competition in the short-haul market to and from New Zealand, Pacific Blue said it believed that there continued to be growth opportunities such as the seasonal services it was announcing today.

"Starting at the end of March we're increasing our Christchurch-Brisbane flights from the current seven to ten flights a week and we've confirmed our Wellington-Sydney services at four flights a week, up from three flights when we launched last September," Mark Pitt added.

"We believe Kiwis and Aussies are now very comfortable with the choices that low-fare travel offers because they can spend less in the air and more when they get there."

Mark Pitt predicted that both the trans-Tasman and Pacific markets could see further moves from legacy carriers to match the low fares offered by Pacific Blue.

"Full-service airlines world-wide are trying to find low-cost solutions to the way they do business and offering no-frills fares as part of their product mix is one option they're considering.

"This underlines what Pacific Blue has known all along - that people want a high quality service with value-for-money fares and are happy to pay for only the extras they want."

Hole and back

5th March 2010

Source: Mountain Scene

The new owner of Queenstown’s infamous “Hendo’s Hole” eyesore will shell out megabucks to fill most of it back in.

The 2.4 ha site on Frankton’s outskirts was dug out for a massive, two-level underground carpark to service embattled Christchurch developer Dave Henderson’s ambitious Five Mile township. 

About 350,000 cubic metres – some 50,000 truckloads – of earth was removed four years ago before Henderson’s plans to build a $2 billion gateway township for 10,000 people fell over. 

Now new owner, Auckland developer Tony Gapes, will dig deep to fill it back in – possibly even using the same dirt. 

He estimates the refill alone will cost about $1.5 million. 

It’s quite a bit of cash, Gapes concedes. 

“Especially since someone’s paid to dig the hole and now we’re putting it back in.” 

Gapes’s company Queenstown Gateway bought the site as part of Five Mile’s 7.8ha stage one late last year and has earmarked it for a supermarket. He paid $21m, Mountain Scene understands. 

To meet his downsized development plans, Gapes expects to fill in the hole’s bottom half and half of its upper slice, still leaving underground parking for 300 to 400 vehicles. 

Perfectly poised to refill “Hendo’s Hole” is Christchurch contractor Buzz March, who excavated it in the first place. 

His company, March Construction, scattered what it removed over the 23ha balance of the Five Mile site, on the other side of Grant Road. 

March claims he still owns the fill as part of his original contract with Henderson. 

March says he’s happy to nego­tiate a contract with Gapes, who’s already had a discussion with March’s son Guy.

“The fill we have there is handy and ready,” March says. 

“It stands to commonsense to fill it from the closest resource, and the closest resource is the fill that we own.
“We’d just be looking at a fair market value for it.” 

Henderson reportedly owed March Construction about $300,000 for the 2006 dig, but March says the two parties settled. 

Gapes won’t comment on whether he’ll re-employ March to refill the hole. 

But Gapes questions whether March still owns the fill. 

“Under property law you own what’s attached to the land,” Gapes says. 

Mountain Scene understands Gapes has an option to buy Five Mile’s remaining 23ha

Five Mile’s makeover

Tony Gapes admits his Five Mile stage one plans are far less ambitious than Dave Henderson’s failed township. 

“But to be fair, in the last couple of years the market has changed an enormous amount,” he says. 

The anchor tenant will be a 4000-5000sq m Countdown supermarket – brand owner Progressive Enterprises is Gapes’s first mortgage holder. 

The balance of his 4ha site will comprise “a large retail component, a reasonable residential component and probably a small amount of offices”. 

“We’ve contacted all sorts of retailers and had a pretty positive response from all types,” Gates says.
Real estate company Colliers International is seeking expressions of interest from national and international retailers. 

Brisbane architect Peter Zillman has been engaged, but Gapes says the design will also be dictated by Queenstown Lakes District Council and its urban design panel. 

“It will be a good-looking Queenstown development but we ourselves don’t know what it looks like yet.”
He hopes the supermarket will be open by the middle of next year. 

He’s unsure whether to keep the Five Mile name: “I don’t know whether it’s been tainted.”

Hotel rates hold value in slump

4th March 2010

Source: The Southland Times

Queenstown hotel room prices have weathered the global plunge in room rates caused by the worldwide recession, industry experts said.

Figures released by Hotels.com on Tuesday show the average price of hotel rooms dropped by 14 per cent globally from 2008 to 2009, making them equal with the price of a room in 2003.

New Zealand Hotel Council independent chairwoman Jennie Langley yesterday said the Hotels.com report came from broad data that did not differentiate between types of hotels and markets, and Queenstown had coped well in the face of such statistics.

"New, unfinalised figures show that the average rate per room sold in Queenstown from 2008 to 2009 dropped by about 3 per cent compared with a New Zealand-wide average of about 5.5 per cent," she said.

The Hotels.com report shows the global price plunge for hotel rooms started to slow towards the end of 2009.

But New Zealand Hotel Council Queenstown regional chairman John McIlwain yesterday said the resort's hotel room prices had started to recover sooner because of factors including a strong Tourism New Zealand campaign, a good snowfall, an exchange rate favourable to Australian visitors and exposure gained for the Queenstown Winter Festival by Destination Queenstown.

Occupancy figures had shown a decline in the number of United States and United Kingdom visitors during 2009, but Australian visitors became a mainstay of the local tourist economy, Mr McIlwain said.

"The Australian market has been huge, and we have not suffered as much as other destinations because of that."

Queenstown's early recovery signs looked hopeful for a continued climb in hotel room prices, but had not escaped the effects of the worldwide recession, he said.

"Queenstown was under the same pressure as any other destination around the world in the previous 12 months, but it is pleasing to see prices rebounding as we move into 2010."

10 parties appeal rezoning of Frankton Land

3rd March 2010

Ten appellants are proceeding to the Environment Court against the Queenstown Lakes District Council's plan change for Frankton.

Plan change 19 Frankton Flats B is the land between Queenstown Airport, Glenda Dr industrial area, State Highway 6 and Frankton Flats.

Source: Otago Daily Times

The change would rezone the land to allow for educational, residential, visitor accommodation, commercial, industrial, business and recreational activities.

Queenstown Airport Corporation, Trojan Holdings Ltd, Manapouri Beech Investments Ltd, Foodstuffs, Five Mile Holdings, FM Custodians, Air New Zealand, Remarkables Park, Shotover Park and Queenstown Lakes Community Housing Trust have lodged appeals to the Environment Court.

Judge Jon Jackson set a timetable for evidence to be exchanged at a pre-hearing conference at the Queenstown District Court yesterday.

The council's lawyer Jayne McDonald told the court the appellants' issues included large format retail activities, location of the eastern arterial road, roading and transport, and boundaries.

The parties were in mediation talks, but if agreement could not be reached a hearing would be held later this year.

A pre-hearing conference was also held yesterday into the appeal against the Queenstown Lakes District Council's decision to grant resource consent to the Roman Catholic Bishop of the Diocese of Dunedin to build a school on Speargrass Flat Rd.

The consent approved the $3 million 112-pupil primary school with 22 conditions.

Ayburn Farm Estates Ltd and a group of residents including Gemma and Glenn Davis and Jane and Mark Taylor have appealed the decision to the Environment Court.

Judge Jackson set an evidence timetable at the conference and said a hearing would not take place before June.

Queenstown airport tops growth

3rd March 2010

Source: The Southland Times

Queenstown Airport is the fastest-growing airport in New Zealand and Australia, according to new figures.

Queenstown Airport chairman Mark Taylor presented figures at a Queenstown Lakes District Council finance and corporate accountability committee meeting yesterday that showed a big increase in international and domestic passengers arriving in the resort.

In the six months to December, domestic passengers increased by almost 30,000 compared with the same period in 2008.

International passengers grew by almost 15,000 between the same periods, and scheduled international flights increased by 57.

Mr Taylor said the figures made the airport the fastest growing in New Zealand and Australia – despite the airport not actively seeking additional flights.

"Airlines have continued to feed the capacity for the trans-Tasman market and passengers have continued to fill the seats," he said.

A $6 million runway overlay project began this week and construction on a runway end safety area is expected to be completed before the Civil Aviation Authority deadline of October 2011.

A taxiway for heavy aircraft that will improve traffic flow after landings is in the early stages of development. "It could become a point of contention with airlines if we have to start stacking planes in the air to cope with forecasted growth in the trans-Tasman area," Mr Taylor said.

Cr Gillian Macleod said the rapid expansion of the airport needed to incorporate the well-being of Frankton residents.

"The airport is very successful economically, but there is room for improvement in the area of sociably sustainable growth," she said.

"Queenstown Airport will draw a lot more workers in the future, and getting them to and from the airport may involve looking at public transport options for them. Issues such as this will become more apparent as (the airport) becomes surrounded by Frankton," she said.

Mr Taylor said noise boundary issues and the airport's operational hours would be worked through in future hearings of plan change 35.

"These will be worked through with the council, community and our neighbours," he said.

Submissions for the district council plan change, which seeks to amend existing noise boundaries and introduce a new night-time noise boundary enabling aircraft to land until midnight, close on Friday.

Record year for forced property sales

1st March 2010

Source: TVNZ

The number of forced sales in New Zealand last year reached the highest levels since records began, with an average of more than eight mortgagee sales every day.

The data, released by Terralink International on Sunday, showed there were 3,024 registered mortgagee sales during 2009. That compared to 1,303 in 2008 and 475 in 2007.

Mike Donald, Terralink managing director, said the phenomenal number of mortgagee sales was a clear indicator of the effect of the global recession on New Zealanders.

"In the last two years we've seen the number of mortgagee sales rise by over 500%," he said.

"In 2008 the number of mortgagee sales rose sharply, but 2009 has seen even those record numbers double. Property owners are hurting, there were over

50 forced sales every week last year."

Donald said initially it was properties owned by overstretched investors and development companies that made up the bulk of mortgagee sales.

"As the recession deepened, servicing multiple mortgages or gaining continuing access to credit became harder or impossible, and these owners were forced to sell.

"Later as unemployment began to rise we saw individual property owners increasingly feel the pinch. These owners often with only one property or what we think of as 'mums and dad' home owners made up an increasing percentage of owners that were facing a mortgagee sale," he said.

Donald said a mortgagee sale was often the last resort after a whole chain of events such as a job loss, loss of investments, or reduced cashflow in small businesses.

"That's why we expect it will be many, many months until the number of mortgagee sales drop to pre-recession numbers," he said.

September 2009 saw the highest number of mortgagee sales, 343, since records were first kept in 1994. The fewest mortgagee sales in 2009 were in February with 124.

"The worst affected areas were the regions that include our biggest cities, Auckland and Canterbury.

"In 2007 there were 197 mortgagee sales in Auckland, compared to 519 in 2008 and 1274 in 2009. In Canterbury in 2007 there were 45 mortgagee sales, compared to 120 in 2008 and 329 in 2009," Donald said.

The hardest hit smaller regions were Northland up from 28 mortgagee sales in 2007 to 222 in 2009, and Hawke's Bay up from 17 mortgagee sales in 2007 to 131 in 2009.

Donald said he did not expect the number of mortgagee sales to start to decline significantly until at least the last quarter of 2010.

Terralink derives its mortgagee sales data from legal registrations of actual mortgagee sales.

Queenstown preparing for booming population

26th February 2010

Source: The Southland Times

Queenstown and Auckland are studying the implications of latest projections which point to a population explosion over the next 20 years.

Statistics New Zealand figures show the Auckland region population will experience 60 percent of the nation's growth, taking its population from 1.37 million to 1.94 million over that time.

This means that the City of Sails will be home to 38 percent of New Zealanders.

The Queenstown region population is predicted to grow by 2.2 percent a year -- the highest growth rate in the country.

If the forecasts prove accurate, Queenstown's population will increase from 24,100 to 41,700 by 2031, with the number of people over the age of 65 tripling.

Auckland Regional Council's planning committee chairman Paul Walbren said planning was under way but there was still a risk the city's infrastructure would not be ready to match the population growth, especially in terms of transport. Queenstown Lakes District Council said it had done an independent analysis of the resort's population growth, which took into account visitor numbers.

Current numbers would double by 2026, said Queenstown Mayor Clive Geddes.

"Queenstown's average day population of around 35,000, will double to around 70,000, and our peak population, which is district-wide, will rise from 70,000 to around 140,000 by 2026," he told the Southland Times. Mr Geddes said preparation for growth was something the council had been prepared for, for a long time.

Of New Zealand's 73 territorial authority areas, 44 are projected to have more people in 2031 than in 2006.

However, population growth will generally slow over the projection period because of the narrowing gap between births and deaths.

Queenstown set for highest growth

25th February 2010

Source: The Southland Times

The Queenstown Lakes district is tipped to have the highest growth rate in the country by 2031.

Statistics New Zealand yesterday issued population projections for the country.

Projections for the 25 years from 2006 to 2031 predict national population growth will generally slow down because of the narrowing gap between births and deaths.

But Queenstown looks set to flip that trend by increasing its population by 2.2 per cent per year, boosting the resort's 2006 population of 24,100 to 41,700 in 2031.

The Subnational Population Projections report states that all territorial authority areas will have more older people in the future, and the Queenstown Lakes district's population of people aged over 65 will triple by 2031.

The Queenstown Lakes District Council has done an independent analysis of Queenstown's population growth, which takes in the number of visitors to the resort.

Queenstown Mayor Clive Geddes said yesterday current numbers would double by 2026.

"Queenstown's average day population of around 35,000 will double to around 70,000, and our peak population, which is district-wide, will rise from 70,000 to around 140,000 by 2026," he said.

Mr Geddes said the council figures were based on an unconstrained growth model but accepted there could be popula-tion constraints between now and 2026.

"The QLDC is not prepared to guess what those constraints could be.

"We don't want people to run out of water in 2020 because in 2010 the council had a guess at what the population might be, and the 2001 and 2006 censuses have reinforced our figures."

Mr Geddes said Queenstown had a very disjointed demographic profile, with the highest percentage of people between the ages of 17 and 35 countrywide, and one of the lowest percentages of people aged 55 and over.

Mr Geddes said preparation for growth was something the council had been prepared for for a long time.

"All of the council's infrastructure works for the next 10 years and the 10 years after that are driven by those population projections, and every three to four years we review our progress."

Mr Geddes said if population growth slowed, so did the rate at which the council put in infrastructure services but, if it grew, the council would adjust to put in amenities earlier.

Queenstown substation built with room to grow

25th February 2010

Source: The Southland Times

A new electricity substation in Queenstown, designed to grow with the resort's power consumption needs, opened yesterday.

The $6 million substation, owned by Aurora Energy, is not recognisable from the outside as a high-level electricity distribution centre.

Aurora Energy chairman Ray Polson said the design was a step towards future-proofing Queenstown's electricity supply.

"When we started looking at expansion within the region, it was clear that the growth was going to continue," he said.

"So when a new substation was required, we looked 50 years into the future rather than the normal short term, and we've got room for further expansion as the area is subdivided and the population grows."

Room for another three switchboards has been allowed within the substation structure, which Mr Polson estimated could cope with population growth during the next 100 years.

The substation was opened by Queenstown Mayor Clive Geddes in a ribbon-cutting ceremony.

Lowest house sales in 10 years

16th February 2010

Source: Otago Daily Times

Property sales in Queenstown for January were the lowest in 10 years, figures show.

The Real Estate Institute's Queenstown spokesman Adrian Snow said last month had abnormally low inquiry levels and significantly low sales.

"For real estate agents, it seemed like a very long holiday period.

January 2010 recorded 26 residential dwelling sales, which represents a significant low, with the last month that a lower figure was recorded being December 2000," he said.

However, Queenstown figures were better than the national sales figures, which hit a 20-year low.

Mr Snow said the Queenstown market changed in December from a relatively buoyant period to very low buying activity.

"The Christmas holiday period usually reduces December to about two weeks of normal real estate activity, but it appears that even this may not have been achieved this year," he said.

However, new properties had come on in January and these would add stimulus.

It was still a buyers' market.

Any property priced at what buyers regarded as "above the market" was not selling.

Twenty-six houses sold in January, down from December's 42 sales and and 43 in January 2009.

Apartment sales remained "sluggish", with only two sales last month.

Seven sold in December and six in January 2009.

Section sales had been relatively stable.

Eight sold in January, and 11 in December and 11 in January 2009.

Median prices were also relatively stable.

In January the median house price was $531,250, compared to $481,000 in December and $560,000 in January last year.

Resorts' guest nights up

15th February 2010

Source: The Southland Times

Queenstown and Wanaka enjoyed a good start to the summer, with the two lakeside resort towns delivering record guest night numbers for December.

Figures from Statistics New Zealand's Commercial Accommodation Monitor show the Wakatipu region recorded 218,194 bed nights for the month, up 24,000 nights, or 12.1 per cent, compared with the corresponding period in 2008.

The increase was the largest in New Zealand, the country as a whole having recorded a 4.4 per cent increase of 137,000 nights for December.

Queenstown's international and domestic guest nights were both up on December 2008, with jumps of 14.8 per cent (157,180 nights) and 5.8 per cent (61,014 nights), respectively. Figures also showed that hotel occupancy had also increased 13.8 per cent.

Destination Queenstown chief executive Tony Everitt said the results reinforced the resort's position as a premier year-round holiday destination.

Meanwhile, Wanaka experienced record numbers of visitor nights for December, with increases across both markets.

A total of 63,870 visitors stayed in the town, up 30.5 per cent on December 2008. Most of that growth was from Kiwis taking holidays in the town, with domestic nights up 78 per cent. International nights rose 4.6 per cent.

House prices fall in Central, Qtown-Lakes Region

15th February 2010

Source: The Southland Times

Central Otago and the Queenstown Lakes district were the only areas in the country where house prices fell last month, according to the latest Real Estate Institute of New Zealand report.

A Queenstown-based valuer yesterday said the regional housing market, driven by holiday homes and lifestyle blocks, was more susceptible to a sustained downturn because the boom times were so good.

The REINZ report says the Central Otago/Lakes region suffered a drop in the January median price, falling 10.4 per cent to $410,000.

Hamish Goldfinch, of Moore & Percy property valuers in Queenstown, said the REINZ report was an accurate indication of prices.

During the property boom, at its height in 2007, the resort town's house prices were inflated much more than other regions.

"We've suffered from over-inflation beyond other areas and we've a long way to fall back," he said.

Overseas buyers and out-of-towners buying up lifestyle blocks or apartments had inflated those prices, he said.

When boom went to bust the volatile market had further to fall than other more stable housing sectors, he said.

Banks had tightened their lending requirements, too, making it harder to secure mortgages, which left fewer available buyers in search of holiday homes, Mr Goldfinch said.

Confidence had returned to the housing market generally but Queenstown, Wanaka and Central Otago lagged behind, he said.

Wanaka First National principal Lynette Winsloe said sales of entry-level homes picked up last month.

A new three or four-bedroom house in Albert Town could be yours for $400,000, Ms Winsloe said.

The Wanaka market had improved last yearand lenders accepted a recession-hit housing sector called for flexibility "pricing their products to meet the market," she said.

The median regional price for Central Otago/Lakes – the halfway point for all house sales and roughly equivalent to the average price – was $432,500 in Decem-ber and $457,000 in January last year.

In Queenstown, the median price increased within the township, from $481,000 in December to $531,250 last month, but overall prices fell.

In Central Otago, where 32 houses sold last month, the price fell from $417,000 in December to $347,500 last month.

Twenty-six houses sold in Queenstown last month, down from 42 in December.

The Otago region showed the strongest growth in sales, up 17.9 per cent to an average price of $247,500, while Southlanders completed their January house sales faster than anyone else, on average in 33 days, the report says.

Cool off for house sales in January

12th February 2010

Source: tvnz.co.nz

House sales dropped to their lowest level in 18 years in January, according to the Real Estate Institute of New Zealand (REINZ).

REINZ says 3,666 houses sold during the month, the lowest since electronic records of the survey started in 1992, and only the second time the figure has dropped below 4,000.

Figures first dropped below 4,000 in January last year.

Compared with December last year, 1,291 fewer houses were sold in January 2010.

REINZ president Peter McDonald attributes the cool-off to uncertainty over the government's direction on property tax.

The government had been assessing a report by the Tax Working Group which had suggested the government consider, among other recommendations, a capital gains tax, a land tax, and a disallowance of depreciation on residential investment property.

The government has since ruled out a comprehensive capital gains tax and a land tax.

"Hopefully the market will start to pick up now things are a bit clearer after the Prime Minister gave his opening speech to parliament on Tuesday," McDonald says.

Overall, $1.52 billion worth of houses were sold in January. The median house price was up $25,000 on January 2009, but down $10,000 on the December median.

REINZ says the median house price rose in 11 out of the 12 regions when compared with January 2009.

The Central Otago/Lakes region was the only one to experience a drop in median price, falling 10.4% fall to $410,000.

The Otago region showed the strongest growth in sales, up 17.9% to $247,500, followed by Taranaki up 12.5% to $300,000, and Canterbury/Westland up 12.1% to $319,500.

Sales in the Auckland region rose 6.7% to $450,500 and Wellington rose 3.5% to $375,00.

It took a median of 43 days for houses to sell in January, 16 days quicker than in January last year, but 10 days longer than in December 2009.

REINZ says sales were quickest in Southland, at 33 median days, and in Auckland, at 36 days.

Meanwhile, REINZ's monthly House Price Index decreased 1.6% to 3,201.8 in January.

The index basically shows the average sale prices for common groups of properties across 1,800 suburbs.

Positive start to Queenstown summer

12th February 2010

Source: fourcorners.co.nz

It’s been a hot start to the Queenstown summer with the resort recording the largest increase in guest nights for New Zealand in December 2009.

Latest figures from Statistics New Zealand’s Commercial Accommodation Monitor show December was a busy time in the Wakatipu with a total of 218,194 nights recorded - up an extra 24,000 nights or 12.1 per cent compared to the same period last year.

New Zealand as a whole for December was up 4.4 per cent with an increase of 137,000 nights.

Destination Queenstown CEO Tony Everitt says the local results reinforce Queenstown’s position as premier year round holiday destination for visitors.

 “Well done to the tourism industry overall for still managing to produce positive results in what’s been a challenging time on a global economic scale,” he says.

“There are still a few months to go but I think we can be cautiously optimistic the rest of summer will continue in a similar manner.”

According to the December CAM, international guest nights in Queenstown are up 14.8 per cent to 157,180 and domestic up 5.8 per cent to 61,014 compared to December 2008.

NZ’s international guest nights overall during the same period has grown 6.6 per cent to 1,449,858 and domestically the country has also experienced a 2.7 per cent growth to 1,792,112.

The CAM also reveals hotel providers have enjoyed increases, up 13.8 per cent from December 2008, and this is further backed up by the NZ Hotel Council.

 “There has been positive growth in hotel occupancy across all sectors compared to the prior year,” NZ Hotel Council Regional Chairman John McIIwain says. “We believe this should continue into the first quarter of 2010.”

DQ’s spring and summer campaigns rolled out throughout NZ and Australia from August to November last year.

DQ is now working on the next campaign phase promoting Queenstown’s ‘True Colours’ in Australia and NZ.  Advertisements encouraging people to visit the resort in autumn start in the next few weeks.

Receivers trying to finish project

12th February 2010

Source: Otago Daily Times

More than $67 million has been poured into Queenstown's $1 billion Kawarau Falls Station development in the six months after two companies associated with stage one went into receivership.

Melview (Kawarau Falls Station) Development Ltd and Melview (Kawarau Falls Station) Investments Ltd were placed in receivership in May last year by Bank of Scotland International.

The receiver's second report says the two companies owe the bank $180 million, up from the $117 million figure at the time of the receiver's first report in August.

Receiver Grant Graham, of KordaMentha, said in his second report, released this week, the bank had continued to fund the project with a further $62.8 million between May and November last year.

More than $64 million was spent on construction, $1.6 million on receivers' fees and $795,645 on legal fees.

It was unlikely funds would be available to pay the $3.5 million owed to unsecured creditors.

Since the receivership, the companies had settled debt owed to the Inland Revenue Department.

Mr Graham said the receivers were working with all parties involved in the development, including management at the site, to assess options for the companies' assets.

"In the meantime, work continues on the development.

"Pre-sales agreements to sell all properties under stage one of the development were entered into . . . with various parties prior to receivership," he said.

No property had been sold and site work had continued.

Otago University business law lecturer David Sim said it seemed the receivers were trying to complete the development to maximise return for creditors.

"Normally, a receiver would sell all the assets to pay creditors, but the other option is to trade on, which seems to be what [KordaMentha] are trying to do.

"If they sold a half-finished development they would get much less than if it was completed," he said.

The bank would want to recoup as much as possible, so would further fund the development so it could be finished, he said.

It was possible the receivers could "trade out of the difficulties".

"It is not very common, but if the development makes enough money to pay all its creditors, it could be handed back to the shareholders and directors," he said.

Tax will push up rents says report

10th February 2010

Source: nzherald.co.nz

Rents on investment property will rise and buildings will deteriorate if the Government axes building depreciation tax claims, says a KPMG report commissioned by the Property Council.

The report opposes Government reform based on the Tax Working Group's report.

KPMG said non-residential landlords would pay most of the $1.3 billion netted by changes to the tax rules because about 70 per cent of depreciation claimed in New Zealand was for non-residential property.

"The economic cost of removing depreciation on buildings will be borne primarily by the New Zealand business sector," it said, predicting the result would be lower-quality infrastructure because of fewer incentives to reinvest in capital and possibly higher rents as landlords recovered lost tax deductions.

"Neither will be a particularly desirable outcome. New Zealand would be an outlier internationally. The majority of our trading partners ... allow depreciation on some or all non-residential buildings. In the race to attract and keep capital, New Zealand would be at a significant disadvantage," KPMG said.


The council is New Zealand's main organisation for commercial, retail and industrial property consultants, managers and landlords who are responsible for real estate worth $24 billion.

KPMG said since the late 1970s, commercial and industrial buildings have depreciated at 2-4 per cent annually.

Prime Minister John Key yesterday ruled out a capital gains tax, land tax and the risk-free rate of return method of taxing income but said the system would change. Landlords were one target and changes would be announced in May's Budget.

KPMG said the tax working group's building depreciation recommendations appeared to be aimed at addressing shortcomings in residential rental housing tax. The consultants urged that to be the target, not bigger investment property.

"If there is an issue with the taxation treatment of rental housing, this should be addressed as a specific targeted measure. We note, for example, that some other jurisdictions differentiate between residential and non-residential buildings, allowing tax depreciation only on the latter.

"We believe a clear distinction needs to be drawn between the residential rental sector and the commercial and industrial property sector ... In contrast to residential rental property owners, we understand the commercial and industrial property sector is a net tax payer and contributor to the New Zealand economy.

"Unfortunately, the perception is that all buildings should be included in the scope of any depreciation change. This is not helped by the fiscal implications being based not only on removing depreciation on residential rental properties, but all buildings.

"This seems an illogical leap from the solution the group appears to be recommending to a very narrow problem," KPMG said.

Shamubeel Eaqub of NZIER wrote a paper for the council saying New Zealand would be unusual internationally if it axed building depreciation.

"This could hamper already weak foreign direct investment into New Zealand, the health of the local capital market and erode export competitiveness.

"This is clearly counter to government policy objectives of making New Zealand a more internationally competitive economy and would place us at a further disadvantage to Australia," Eaqub wrote.

Property investors would be severely penalised.

"Depreciation is a non-cash expense for businesses, which spreads capital expense over the life of the investment. The effect of depreciation is to reduce the tax burden, by reducing the taxable income by the depreciation amount, and lift after-tax cash income.

"Removing depreciation on buildings would lift the effective corporate tax rate from 30 per cent to 32 per cent. Removing all depreciation, not just on buildings, would lift the effective corporate tax rate to 42 per cent," Eaqub wrote.

He estimated the removal of commercial building depreciation would levy large costs on New Zealand business of around $1 billion annually.