Auckland has a huge appetite for foreign investment to help fund its infrastructure needs, from transport through to urban development and tourism. The Herald put some questions to Ateed CEO Nick Hill who recently accompanied Auckland Mayor Phil Goff to Japan to talk with potential investors.
What do you see as infrastructure priorities and challenges for Auckland from Ateed's perspective?
Our role is to work with the wider Auckland Council group to support infrastructure priorities which have been clearly spelled out by Mayor Goff — particularly housing and transport, and in areas where the region's recent excellent economic growth has not been shared. Our purpose is to support the creation of quality jobs for Aucklanders, particularly in the south and west, where Auckland's economic growth has not reached as much as other areas.
We help activate parts of Auckland where investment is going in, with Manukau being a priority. We're a piece of a large solution puzzle, with council agencies including Panuku Development Auckland, and Auckland Transport which have huge infrastructure projects.
Through attracting the right infrastructure investment — such as urban redevelopment in focus spatial areas, and in sectors which require new infrastructure such as tourism — Ateed can help influence investment in where quality jobs will be.
Large-scale development requires innovation in solutions and delivery, and industry capability — people infrastructure. It's well known there is a significant shortage of skilled construction workers, and also in the tourism sector. Ateed is working with industries to bridge skills gaps, and with training institutions and government agencies to remedy supply shortages.
You've been to Japan with Mayor Phil Goff, NZTE and others to look at infrastructure investment. What are the learnings from that trip?
When visiting the big trading houses, and presenting to the three targeted investor group workshops, we found an elevated appetite from business people and investors in Japan to learn more about opportunities here, and we learned what we need to do to ensure the momentum isn't lost.
We need to be very clear about our investment narrative as a region, and it was a quick immersion course in how to effectively convey the great opportunities across Auckland.
The value of the Mayor being part of the delegation and of our long-standing sister city relationships can't be underestimated for their value in opening the right doors to allow us to talk to the right people. The business system in Japan is more similar to ours than some other Asian countries, which is also significant.
The fact we are projecting significant demand for investment over the next 10 years, and that Auckland Council is investing $26b, creates clear demand.
How applicable are those learnings to Auckland?
The reality is that foreign direct investment is not just about the money. Investing companies can deliver competitive advantage through technology and expertise, and Japan is a global leader in construction and higher-density urban development techniques. It's clear that our innovation in that space is decades behind Japan. Their development of hydrogen-energy technology is eye opening, and we need to tap into that through inbound investment.
It's well documented that Auckland has a housing shortage of up to 55,000 houses, with future population growth meaning the region may require 400,000 new houses by 2041.
About half of the KiwiBuild houses are expected to be in Auckland. Japan can offer us a huge amount in terms of smart urban development investment.
And it's not just about housing our population. It's about how we will move around the city and how our waste will be disposed of. Japan has significant experience and capability in developing transport hubs with commercial, residential, retail and public amenity.
Auckland has two big events in 2021: The America's Cup and Apec. The Park Hyatt is close to completion. What else is required in the destination infrastructure space and what are hotel investors looking for?
We are working with the Government, the wider council — particularly Panuku — and industry to understand what exactly will be required. We know, for example, that about 10,000 delegates and 3000 media may come to Auckland for Apec Leaders Week.
The current projections are that we should be able to meet demand for hotel rooms in 2021. But looking beyond that, by 2025 Auckland is projected to welcome more than 4 million visitors a year (58 per cent more than now), and that means a projected shortfall in hotel rooms by then.
Auckland is investing in a number of infrastructure projects located in the central city and waterfront area which will be complete or well advanced by 2021, such as the City Rail Link.
We know that the New Zealand International Convention Centre will be up and running by 2021, and that's a hugely important component in what Auckland can offer in terms of business events in conjunction with Apec and the America's Cup.
The recently announced estimated $250m Hotel Indigo Auckland, which we played a significant part in bringing to Auckland through the NZTE's Hotel Investment Attraction Project that began in 2016, gave us good insight into what hotel investors are looking for.
Our investment specialists worked closely with Ninety Four Feet, the Australasian company building the hotel, for more than a year to help it understand Auckland's visitor economy data, navigate the nuances and cost structure of the commercial property market, and put together a business case that stacked up. We also helped the company find the right site, crucial for a premium hotel.
Auckland is projected to need an additional 1000 rooms by 2025, and we're currently at around 85 per cent occupancy, so there's specific interest from Japan in hotel investment opportunities.
● Nick Hill is chief executive of Auckland Tourism, Events & Economic Development (Ateed)