Opportunities In Central Christchurch
Unique investment opportunities abound in Christchurch, writes Persephone Singfield.
1 March 2020
Nearly a decade on from the Christchurch earthquakes we are enjoying the emergence of a new city. Most cities gradually evolve; rarely does the world get to watch a city improve the way it operates on such a large scale.
For residential property investors it has been an interesting decade. The rest of the country faces market changes and so do we, yet we have had to deal with some very real local challenges too. Some investors took action in the confusing years subsequent to the quakes while others did not, or could not. Many weren fearful, others wanted to jump into the market but were encumbered by insurance claims.
Out of the 10 anchor projects in the Christchurch Central Recovery Plan only three are complete and there is a lot more scope for growth and investment. Christchurch has been widely tipped to enjoy capital gains in 2020, great news for many patient property owners.
I am excited today about opportunities in the central suburbs. A great location is a great location and many are still reluctant to snap up central real estate that, when compared with any other large city in New Zealand, is very cheap.
This is understandable, investment in Christchurch can be confusing and most investors avoid anything out of the ordinary. There are three technical categories to know for land (TC1, TC2, TC3). These enable engineers, designers and construction companies to decide the most appropriate foundations for buildings.
Many avoid sites designated TC2 or TC3, but wasn’t it Warren Buffet who said to be greedy where others are fearful? Where some are intimidated by TC classifications, others remember that in the end all investment can be broken down to numbers, so they adjust projected costs as needed and look for value.
Designing foundations is not new. There are many other areas of the country where local authorities require specific engineering design for foundations. For example, in parts of Auckland, Northland (where an estimated 40% of houses have engineer-designed foundations), Rotorua, Waikato, Wellington and for most hillside houses nationwide. It all depends on ground conditions. (Resource building.govt.nz)
Back to Christchurch. There are properties to the south and east of the city centre in the Residential Medium Density (RMD) zone with an old villa and big backyard. These can be perfect candidates for small development; the old house is usually rentable while you work through the design and planning of the site development.
We recently purchased one of these properties and chose to renovate it to get the best rental return. The house was well placed on a 491m2 corner section of TC3 land in the RMD zone and we were granted resource consent to subdivide and build a new three-bedroom house on the back half of the section.
Christchurch must build within height limitations, so we are in a unique position where we must increase the density of the available land if we are to provide housing close to the city centre.
These properties can only grow in value and the suburbs on the northern city fringe have been developed in this way for years, while the east and south have
I’m not suggesting you run out and buy land based on technical classifications, you have to work through the process carefully, of course. However, you can build on TC3 land based on sound engineering advice. Sometimes you get a bonus. When we engaged our professional team to commence planning and design, our geotechnical engineer’s testing assessed it as TC2 land, which simplified the project and reduced costs. Interestingly, the ground conditions that were originally mapped for our city can only be verified upon testing. How many more hidden opportunities are there?
I believe that those who do secure property in central Christchurch in the current market will do very well over time. It takes a bit more effort than other markets, on top of all the standard investment criteria we look for, I guide iFindProperty clients through a careful due diligence process unique to our city. However I believe the rewards easily outweigh the extra effort involved.