Liam Dann 's Opinion

Liam Dann is the business editor of the NZ Herald

Liam Dann: Will skyscraper rise from 30-year hole?

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Financial crashes have foiled earlier plans but Chinese company may have the right focus and confidence.

The futuristic 52-storey building looks lifted straight from the streets of Shanghai.Picture / Paul Brown & Architects
The futuristic 52-storey building looks lifted straight from the streets of Shanghai.Picture / Paul Brown & Architects

I find it hard not to get excited about plans for New Zealand's tallest skyscraper (not counting the pointy bit on the Sky Tower) which is planned for the block between Elliott and Albert Sts in Auckland's CBD.

The artist's impression of the 52-storey mirror-glass building looks like it has been lifted straight from the streets of Shanghai.

That's not surprising as the tower has been planned by Shanghai-based New Development Group.

And as anyone who has walked the streets of the Pudong district in that city can tell you - it looks like the future.

Given that the proposed site has been a makeshift carpark for nearly 30 years and already has consent for a similar-sized tower, it is even harder to see much downside.

Auckland's embattled mayor, Len Brown, is certainly championing it.

What with his plan to fast track the central rail loop, it looks as though Brown is on a mission to rehabilitate his image by branding himself as a mayor of progress - the guy who makes things happen.

When you consider the development stalemate Auckland has been in, this can't be such a bad thing. Whatever his moral shortcomings, if Brown's response is to go into workaholic overdrive for the city, he may still have a future.

The new tower has sparked some inevitable protests from the design purists but there has been little of the kind of xenophobic controversy about Chinese investment that we saw around the Crafar Farms deal.

The bigger question for the cynics is: will this tower actually get built?

Anyone who has followed progress on this site (or lack of it) probably has good cause for remaining sceptical, at least until the diggers turn up.

The site may be free of political consent problems but its long-term development plans have consistently run up against relatively short-term economic cycles. And this has proved its undoing over the years.

A dig in the Herald archives shows the hole in the ground dates back to 1987. Less than a month before the big stock market crash of that year, property firm Acadia Corp demolished the Royal International Hotel.

The hotel was historic - or would have been viewed as such these days - it even hosted the Beatles in 1964.

But Acadia planned a $120 million, 32-storey office tower on the site and the 80s were a forward-looking era.

The tower was due to open in 1990. But of course the crash killed that. The site became a carpark and series of owners and tower plans came and went.

In 2003 it was bought by Korean company Daeju and a dramatic 67-storey, $450 million retail and apartment complex known as the Elliott Tower was proposed.

It got consents and was to have been completed in time for the 2011 World Cup. But when the global financial crisis hit, Daeju got cold feet and sold out.

The site was eventually bought by multimillionaire Shanghai businessman Furu Ding's New Development Group.

So, no surprise that this new deal might give some people a sense of Daeju Vu (sorry). But seriously, there is still a long way to go.

The press from NDG has suggested the tower could be completed by 2020, and based on the speed at which things have been going up in Shanghai that is hardly far-fetched.

But anyone watching China's economy right now knows that there are some worrying signs of a property bubble - the kind of credit bubble that sank Western financiers last decade.

The Chinese Government is well aware of this and is not shy of using its considerable regulatory powers to let some air out of the bubble.

All sorts of bank lending curbs have been imposed around China - many of them make New Zealand's loan to value ratio rules look extremely light-handed.

But worries about the bubble - and the shadow banking environment that these rules may have created - persist.

The kind of property boom China is having has never ended well for a Western economy. Whether a single-party state has the right mix of power and subtlety to head the boom off in an orderly fashion will be fascinating to watch. It is one of the great economic experiments of our age.

Even if efforts are successful, it seems highly likely that at some point in the next few years we'll see some instability out of China that will rattle markets around the world. Hopefully, from a global perspective, not until the US and European economies are firing on all cylinders again.

But the global perspective is not necessarily the Chinese state's primary concern. The Government there may choose to give the market a short, sharp shock that would send shockwaves around the world.

This is all conjecture, of course. And NDG may be so well positioned that it will be ready for any market ups and downs that come along.

Even so, questions are already being asked about how economically viable a tower of this size could be in Auckland - especially given the growth in office space down towards the waterfront. And if this tower is to be primarily a mix of retail, residential and a hotel - who will fill it.

For Chinese investors and developers, with their long-term economic focus and confidence in the future - this may not be as daunting as it seems to Kiwis.

The sheer scale of development that Shanghai has seen in the 27 years since that block between Elliott and Albert St got its hole in the ground provides a pretty sobering reminder of the differences in scale upon which our two nations operate.

- NZ Herald

Liam Dann

Liam Dann is the business editor of the NZ Herald

Liam Dann is the Business editor of the New Zealand Herald, overseeing all our business content in print and online. He has been a journalist for 20 years, covering business for the last 14 of them. He has also worked in the banking sector in London and travelled extensively. His passion is for Markets and Economics, because they are the engine of the New Zealand economy.

Read more by Liam Dann

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