Blog / Property Management
The Ray White Group, Property Management Shines in Crumbling City
Determined to find the positive from two earthquakes in less than a year, the Christchurch real estate industry has focused its energies on property management while the city is rebuilt.
After many requests for information about what was happening in the South Island’s largest city, the Ray White Group held a seminar in Sydney for property investors with interests in Christchurch. Ray White offices manage 2,400 properties across Christchurch and sell one in every four properties in the city. The group also engages 260 independent contractors across the agency business in the Canterbury region.
Opportunities Spring from the Rubble
The March 22 property investment seminar featured a host of speakers discussing the challenges and opportunities facing those involved in Christchurch’s rebuilding efforts. They believe the rental market will be key for investors and real estate agents in postquake Christchurch. The magnitude 6.3 earthquake hit the Christchurch CBD in February, coming only months after another earthquake rocked the city in September 2010. Seminar speakers included the New Zealand Institute of Architects appointed ambassador for post-earthquake Christchurch City, Ian Athfield, as well as Tony McPherson from Ray White NZ Residential, Adrian Raine from Ray White NZ Commercial, developer Ken Wimsett from Latitude Group and Ray White’s Celia Burbery who spoke about tenancy legislation.
21st Century City
Mr Athfield said the earthquake damage was an opportunity to improve the city’s design by consolidating the CBD and reinvigorating Christchurch’s centre by redeveloping living, entertainment and shopping facilities.
This view was backed up by Mr McPherson, who said the earthquake had presented a second chance for Christchurch to be refreshed after declining in recent years.
“We have an opportunity now to solve some of the issues we had in the CBD because it had become quite fragmented. There were 5-6 suburban shopping areas and the central city was struggling a little, but now we have been given an opportunity to create something there that is designed for the 21st century and draw people back into the city,” he said.
Mr McPherson is the director of AH McPherson which owned eight Ray White offices in Christchurch before the second earthquake. He said the impression was that Christchurch had been flattened and 128 buildings have been earmarked for demolition, but 75 per cent of the city’s buildings were still standing.
“There’s a lot of houses that were damaged but are still liveable and some may ultimately be destroyed, but the CBD and the eastern suburbs took the major brunt, whereas a significant part of the city in the north and west only had minor damage,” he explained.
Consolidating Assets
AH McPherson has now created a ‘super office’, called Ray White Metro, by amalgamating five offices affected by the earthquake. More than 40 people are currently working out of the refurbished office and still operating as separate entities but with increased support.
“These businesses were only just recovering financially from the September event. We just didn’t know what was going to happen post-earthquake and so we created a model that was survivable and sustainable, but at the same time would be able to expand out again once conditions and recovery became viable. It was really to run in the most cost effective way,” Mr McPherson said.
The Ray White Metro super office will be located at Bush Inn Centre at Church Corner, combining Ray White offices from Church Corner, St Albans, Merivale, Harewood and Halswell.
“Our business is about people and supporting those people. The idea was to bring all our resources together and give them a high level of support for their businesses during this period. We will help them get through this post-earthquake period,” he said, and explained there was more work involved in selling property at the moment because insurance assessments and geotech reports had become common inclusions in the sales process.
While admitting the organisation was currently in “survival mode”, plans are already underway for new offices, Mr McPherson said.
“There is a commitment to rebuild the CBD and the trading area where we work is to the north and west of Christchurch so we might design and purpose-build somewhere on the edge of the CBD. We’re probably looking at running satellite offices from there once market conditions determine where and when required,” he explained.
Leasing is hot property
This example shows how there are currently opportunities for commercial leasing as companies try to find new office space in the buildings that withstood the quake. With a quarter of the city’s buildings out of play, negotiations have heated up and lease terms have become bargaining chips. Some businesses have decided to quit the city altogether and have moved out of the CBD to office parks, expanding Christchurch’s sprawl.
It's not just commercial property in play here. Ray White New Zealand CEO Carey Smith predicted the number of rented homes in Christchurch would double to one in seven in the next two years. One in fourteen properties is currently rented.
While around 65,000 Christchurch residents have left the city, which makes up 20 per cent of the population, not all have sold up. Many have chosen to rent out their properties instead to gain an instant return, while continuing to maintain a relationship with the city and the region.
The time frame involved in selling, especially when many sales now involve insurance assessments, means that those that are liveable but not saleable in the short-term have become good renting prospects.
At a time when residents are looking for somewhere to live while their homes are rebuilt, renting is a preferred option. Rental properties are also needed to house the specialist labour contractors brought in to help rebuild the city while fulfilling their shortand medium-term contracts.
As demand for these properties increases from tenants, investors will follow, showing that property management will drive the Christchurch property industry as the city recovers.
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