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by Richard Dalman

Moving Forward Positively Post Covid-19

May 2020

It’s great that we in New Zealand are now in Alert Level 2, and that we are now back in our Christchurch and Auckland studios re-engaging with clients and colleagues face to face albeit at a slight distance.

For many people and companies with income taking a hit, and who prior to the lockdown had started or were contemplating design, development or refurbishment projects, you might be thinking......

− should I continue with my development?
− should I move into the design phase?
− I’ll wait and see what happens in the market
− with the decline in revenue, I can’t afford to refurbish my hotel now.

So we have reflected on a few reasons as to why now is a good time to consider proceeding or continuing with your project... whether it be commercial, residential, industrial, or even hospitality or leisure:

• Interest rates are at their lowest in living memory. And Westpac Chief Economist Dominick Stephens expects the Reserve Bank to drop the OCR (Official Cash Rate) even further – potentially into negative territory later this year. If you need to borrow, there’s unlikely to be a better time.

• Whilst the government is focussed on economic recovery through construction works, these are primarily on major infrastructure projects. Conversely, with a number of private sector projects postponed or cancelled, many builders and subcontractors now have spare capacity, are looking for more work and therefore, likely to be more competitive. This has several potential benefits – margins could well be lower resulting in a cheaper build, and with the increased availability of trades you are more likely to get the A team on the job leading to a faster yet high quality outcome.

• Councils throughout the country are keen for their region’s own economic recovery so a smoother, quicker turnaround of both Resource and Building Consents is to be expected.

• With some private sector works not proceeding, consultants may be less busy and actively seeking work to retain their employees; they will be able to activate quickly and with a focus on your project, deliver a set of documents faster.

For Hotel projects – new or refurbishments:

• If started now, a new hotel will not be open for two to three years – perfect timing for what most travel industry experts believe will be when international travel starts to fully kick in again after the inevitable lag once borders re-open.

• In the meantime domestic travel will ramp up especially with New Zealanders not being able to travel internationally. It should be noted that approximately 60% of tourism expenditure is by domestic travellers and in some places like the Waikato, Hawkes Bay, Northland, Taranaki and Gisborne, this domestic spend rises to between 70% and 80%, so we are not as dependent on international tourism as some think. We need to be focussing now on what Kiwis want. Tourism NZ and regional tourist organisations are working on campaigns – such as Canterbury’s Explore Your Backyard – to sell News Zealand to Kiwis who will want to holiday around the country since they can’t do so overseas. Replacing the 3.01 million trips per year that New Zealanders make overseas will provide enormous potential to build our tourism and hospitality industry back up.

• Some planned hotel projects will not now proceed. As a result of this, there will be potential less competition for the new hotel projects that do proceed.

• Right now is a great time to refurbish your hotel or tourism property when there is low occupancy and therefore little business to lose or displace. This also enables a substantially more efficient refurbishment process and less complaints from guests regarding construction noise. These factors all enhance a refurbishment’s financial viability. And refurbishments – especially “soft”, can be implemented quickly and usually without the need for Council consents.

• A refurbishment now – guest rooms and/or public areas – will keep your product up to date with recent hotel openings – you won’t be left behind especially over the coming years as guests become more selective with their improved “buying power”.

• For Christchurch, Waikato and Northland, there will be good convention, exhibition and events opportunities with the Auckland International Convention Centre being further delayed. This will help drive both business and leisure visitation to these regions.

 

At Dalman Architects, we remain focussed on delivering high quality services and creating enriching spaces across the architectural and interior design spectrum. We welcome the opportunity to chat to you about your project be it an existing property or at feasibility stage.

Please feel free to contact Richard Dalman at rd@dalman.co.nz or on 021 775 445.