Re-Purposing New Zealand's Crown Jewel

Whilst the work from home ("WFH"), death of the office, rise of the co-working space debate continues to rage between experts across markets around the globe, one fact the COVID crisis has highlighted is that the WFH experiment, decades in the wings, has now proved that working remotely can be done succesfully. And so it follows that if you can WFH can't you also WFA (work from anywhere)? And if you can WFA why wouldn't you work from, say for example Queenstown or from one of the many other beautiful places in New Zealand?

Enquiries from businesses around the globe are on the rise, as are enquiries from the capital that might want to fund the places they occupy. Microsoft has recently announced its intention to be the first multi-national cloud service to open a data centre in New Zealand, with the investment likely worth tens of millions of dollars, demonstrating "confidence in the country's digital future ..". The world is connected as never before so it's easy to envisage, in this new COVID age, NZ as a business continuity hot-site, if not as a centre in its' own right, for global companies not hinged by necessity to any particular place.

So, even though there is lot of negativity about commercial real estate around at present, particularly so in relation to our tourism mecca, Queenstown, a "can-do" attitude is emerging, improving local levels of positivity about the future. It's almost a cliche to repeat how good of an opportunity for recovery there is for this country's jewel in the crown, but for good reason as it's true and many of our leading entrepreneurs and thinkers have said as much.

As Queenstown Mayor Jim Boult also said recently "... there's no point standing around wringing your hands ..." - he was about to throw himself off the world's first commercial bungy, A J Hackett's Kawarau, so there was some doubt about what he was referring to!

Mayor Jim Boult (post hand-wringing). Picture from ODT

Now is the time New Zealand must seize its opportunity as, without dwelling too much on the detail, there has never been more interest in Aotearoa. The country's status as a safe place, already in the ascendancy over the past few years given growing geo-political uncertainty and risk, has been elevated by the way the 5 million strong Team NZ has dealt with the COVID 19 crisis. People from all over the world want to come here, to live and to work and to play, more so than ever before. And in this age of connectivity it's now possible.

Some observers have called for more off-shore billionaire bucks, more James Camerons and Peter Thiels (in exchange for visas) to help to jump start the economy, but this is off the mark. I'm happy to be challenged but billionaires have and tend towards vanity projects when bringing money to NZ, not in building root and branch businesses. No, it's people and ideas that build economies and if they're good enough capital will always be available.

What's needed is to create an environment where good people and their ideas want to be. In the current context NZ has a head start on many fronts, for example; it's location between east and western markets; global attention; demographics; skilled workforce, natural environment and lifestyle. More importantly and to my earlier point, capital will be very interested in pandemic resilience when it comes to geographic allocations, and in that regard alone New Zealand's performance with COVID-19 has put the country at the top of global rankings.

Queenstown is particularly blessed with many of these attributes, but it now needs to explore ideas for change. It's easy with hindsight to see that the town was singularly focused and far too reliant on tourism, and that its community must now diversify their economy. To do so the built environment should, in part at least, pivot away from tourism and consideration given to re-purposing buildings to reflect the changes in demand.

New focus is necessary; increasing urban density and stopping the sub-urban sprawl that is challenging the town's infrastructure; growing the BTR sector, redirecting stalled hotel projects for affordable residential to address a sector with chronic under-supply issues, re-purposing struggling retail malls or warehousing for well-designed safe, green, health conscious space to attract creative, film, tech and health industries; build the often-mentioned gondola for all year round access from home to the top of the Remarkables range, further develop the hills and MTB trails; repopulate the town with permanent residents, both young and old in walk-able villages creating a more vibrant, more diverse, sustainable environment and economy for the remaining retailers and restaurateurs. A Remarkable Silicon Valley perhaps, a global BCP safe-haven?

Historically, issues of market size, liquidity and remoteness have all been cited as reasons not to invest in New Zealand. Now, each of these criticisms only add to the many other attributes which underpin New Zealand's growing status as a stable business destination.

Tascott & Co | May 2020

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In 2014 Tascott & Co was established to provide clients with informed and independent views, based on sound risk analysis, on all aspects of commercial real estate investment and financing. In 2019 Tascott became a manager itself and completed its maiden transaction. Today we help investors assess, acquire and manage commercial real estate in New Zealand and the UK.