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Return of Cup would benefit investors

If the next America’s Cup is held in Auckland property investors could reap the benefits – although one commentator is warning it may not lead to an economic bonanza.

Tuesday, July 4th 2017, 12:00PM

by Miriam Bell

Auckland's Viaduct

There has been no confirmation yet but Team New Zealand has indicated it would like New Zealand – probably Auckland – to host the next regatta in four years’ time.

Economic Development Minister Simon Bridges announced yesterday that the Government will provide Team New Zealand with funding of $5 million while it prepares for 2021.

He said that while the location for the next America’s Cup has not been decided yet, they knew that hosting a regatta in New Zealand has the potential to generate significant economic benefits.

“The America’s Cup regattas hosted in New Zealand in 2000 and 2003 had a significant impact on the New Zealand economy generating around half a billion dollars of total value added per regatta, particularly in the marine and tourism sectors.”

If Auckland was to, again, play host to the America’s Cup it could well trigger economic benefits and set off another wave of inner city reinvigoration.

However, Property Institute chief executive Ashley Church said expectations of short term economic gain are already being hyped to unrealistic proportions that are almost certain to end with disappointment.

Church was CEO of the Newmarket Business Association during the 2011 Rugby World Cup and he looked to that event for historical precedent.

Around 133,000 people visited New Zealand for the Rugby World Cup and they spent $387 million while they were here, he said.

“And yet there was almost no economic impact on activity in the hospitality and accommodation sectors outside the main CBD in Auckland”.

He said this was probably because many potential visitors who are not interested in an event defer their travel plans in order to avoid activities associated with that event.

“This means that revenue and activity associated with the event replaces activity which would otherwise have taken place, rather than adding to it.”

While the immediate economic spin-off from an event like the Americas Cup may not be as great as touted, Church said that longer term benefits are likely to be generated.

“For example, the last America’s Cup led to the development of the stunning Auckland Viaduct.

“Hosting the event in 2021 will provide a major impetus to the development of new infrastructure on Auckland’s waterfront. Like the Viaduct – this will last for generations.”

But other commentators took a much more upbeat view of what the return of the America’s Cup regatta to Auckland could mean for both the economy and for investors.

First National Real Estate chief executive Bob Brereton said it would be a catalyst for significant new development and would also bring forward deferred projects.

“Apartment sales in the Viaduct will increase markedly and waterfront property, in general, will get a boost. Additionally, new apartment projects will start popping up at every available waterfront vantage point”.

Renewed interest in commercial and industrial land around the city, particularly land where such sites have the potential for side industries, was on the cards, he said.

“There will also be a more urgent focus on gentrification of the waterfront for recreational use.”

Prominent Auckland investor David Whitburn agreed that it would be good for commercial property in these areas and that local industries and employment will get a boost as a result.

He also said that if Auckland hosts the regatta again there will be immediate benefits for property in the Viaduct and Wynyard Quarter.

“Despite their prime location, both areas have had some struggles in recent years. But the return of the Cup will see them getting further development and infrastructure improvement, which adds value.”

The influx of people who would come for the 2021 regatta also means the city’s shortage of both rental and hotel accommodation would have to be addressed.

Whitburn said it should stimulate the need for more short-term accommodation – which would be a bonus for those renting properties via Airbnb.

“Infrastructure development should also benefit. For example, light rail development has been mentioned.

"But there are also issues with the inner city’s existing infrastructure, like the sewerage system, which will need to be addressed.

“Playing host to the Cup should push that. It should result in the relevant players prioritising essential infrastructure spending which is needed to support the development Auckland needs.”

Holding and hosting the America’s Cup would also add to Auckland’s appeal as a great city to live in, he added.

 

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