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Fletcher Building’s downgraded earnings estimates confirmed what everyone in Christchurch knows – rebuilding hasn’t begun.
The announcement shaved more than $800 million off the company’s market capitalisation last week as the share price dived nearly $1 to $6.60 before steadying.
The pace of reconstruction was expected to accelerate in the second half of the 2012 financial year.
The stalled Christchurch rebuild mirrors the general malaise affecting construction nationwide.
In a series of announcements in Christchurch last Friday, Earthquake Recovery Minister Gerry Brownlee highlighted positive economic news for Canterbury.
Canterbury had bucked the predictions of mass emigration, hollowing out of the economy, and a huge increase in unemployment, Mr Brownlee said.
“Through earthquakes and snowstorms the city is still getting up and going to work. Canterbury’s economy is steadily picking up.”
Manufacturing and exports have grown consistently since the February earthquakes, while job advertisements have increased sharply. Business closures in August were the lowest of any month this year; exports and imports improved since the February earthquake and are higher than in August 2010; manufacturing has been expanding since June and in August expanded at a rate higher than the rest of New Zealand; net migration remains negative but has been improving; spending remains at 90% to 95% of pre-quake levels.
But Mr Brownlee confirmed that a 5.5 earthquake last week would spook insurers and delay rebuilding efforts until the second half of 2012.
Rezoning speeded up
Mr Brownlee also announced a fast track for regional rezoning known as Plan Change 1, a green belt like Auckland’s metropolitan urban limit.
Plan Change 1 will immediately be incorporated into the regional policy statement, eliminating any appeals that could have dragged the process out for many months.
In recent weeks some developers have approached Mr Brownlee and his Canterbury Earthquake Recovery Authority (Cera) to have their subdivisions included in Plan Change 1 – notably Ngai Tahu which has a proposed subdivision called Prestons waiting in the wings (a map on the Christchurch Earthquake Recovery Authority website shows the new permitted developments).
Some owners of small blocks missed out. The rezoning allows for several thousand new sections to come on the market but the timing and the prices will be determined by developers.
It remains unclear how many of the 6100 red zoned home owners can afford new sections and homes (circa $400,000-plus) because the government compensation package is based on rateable values, many under $400,000.
According to some estimates, about two-thirds of red zoners will be unable to afford new sections and houses. Mr Brownlee has resisted calls for the government to bulk-buy sections and offer them at a discount to red zoners.
The adoption of Plan Change 1 incorporates most aspects of the plan as it was written by regional council planners including greenfields. Developers within Christchurch city will be required to provide 15 lots a hectare (anyone wanting bigger sections will need to go to neighbouring Waimakariri or Selwyn Districts where the rule is 10 lots a hectare).
“It will be important that the rate of greenfields development is not so great that it undermines consolidation, by providing an excessively large supply of greenfields land,” according to the explanation from Mr Brownlee’s office.
These rules have disappointed proponents of more liberal rules.
The Christchurch central city draft plan hearings attracted strong lobbying from the business community last week.
Business leaders slammed the prescriptive rules and warned of capital flight.
But the draft city plan must be ratified by the Canterbury Earthquake Recovery Authority (Cera), which reports to Mr Brownlee.
The Cera submission made it clear that height restrictions won’t form part of the plan, light rail is highly unlikely, inhibiting business developments in the other parts of the city will not be allowed, and funding is likely to include public/private partnerships for existing and new council assets (promoting Christchurch Central MP Brendon Burns to warn of “an ultimatum framed around forced asset sales”).
The council assets involved would include the Orion lines company, Christchurch International Airport (25% owned by the government) and the Port of Lyttelton, which has a small public shareholding.
Meanwhile, the police want vehicle access to the central city forbidden after midnight except to disabled people and residents.
A police wish list included a call to avoid development of public spaces where people might congregate and inhibiting development of bar and restaurant precincts.