> Looks interesting. Our biggest problem is political uncertainty. Property
> rights in the Central City are seriously compromised by CERA. Risk is
> probably too high for most investors. I notice most current investors are
> very quite at the moment. I suspect they don't want to rock the boat as it
> may compromise compulsory acquisition settlements. I also notice most of the
> post EQ completed CBD rebuilds are subject to compulsory acquisition.
> That's CERAs thanks you to investors supporting the rebuild.
>
> Tony Ward
>
Hello Tony
I'll quote two paragraphs from what I posted on Canterbury Issues.
"Christchurch has had a crisis that we cannot recover from given the
present way we think about, money, debt, rates and the future. The
insurance money we've been promised is not enough. The government isn't
willing to pay more. The citizens are not in a position to pay more
either. We have a problem that seems to have no good solution."
"I think the problem of inner city land owners and the proposal to take
over their land for the new city development could also be resolved by
creating a new instrument giving them continued ownership of the land,
and it's increased value, even though it's now the site of the
Convention Centre. We don't need to be trapped by 18th or 19th Century
thinking."
If I understand the problem correctly, (I'm not an inner city landowner)
with so much of the city leveled, land current land values are much
lower than city landowners expected pre-earthquakes. Current land value,
plus insurance cover, still leaves landlords well out of pocket. Your
equity has not been preserved.
This reminds me of the old US method for financing a railway. The
railway company buys all the land 10 miles either side of the track for
the length of the track. That land has little value because it's hard
to develop. They build the railway, in the process setting up small
towns along the way, and sell the land at ten times what they brought it
for, paying for the railway construction in the process.
As the city is rebuild, those who have ongoing ownership, can expect to
get some capital recovery like that. Over a few years properties should
be returning to the sort of values that existed pre-earthquakes. But
only if you can stay in the game. My suggestion is that all the land
for the new city public works be leased to the city. Ownership of that
land need not reside with the government, although some of it would.
Current landowners would be able to retain their title, but wouldn't
need to rebuild. You wouldn't have control of the lease of course, but
as the cities values recovered there would be increased value in the lease.
Does that work?