Property president wants 'holistic' approach to growth barriers

Peter Mence, newly appointed national president of the Property Council and chief executive of Argosy Property Limited.

A "holistic approach" is needed in relation to barriers impacting on New Zealand's economic development rather than fragmented and vested interest viewpoints, says Peter Mence, newly appointed national president of the Property Council and chief executive of Argosy Property Limited.

"What members of the Property Council do as an industry is provide accommodation for businesses that are active in growing the economy," Mence says.

"It's important therefore that the property sector isn't separated into its own corner and viewed in isolation because we are an 'effectors' of business and industry. If New Zealanders want to see business and the economy grow its important we have the property answers for our clients to achieve that. If property development is constrained as an industry, then the development of businesses which require buildings to operate in, will be constrained also."

Mence says that applying a holistic approach, it's also important that commercial property development is not viewed separately from residential development. "Just as businesses need buildings to work in, so it's important that housing is available within a reasonable travelling distance for employees of those businesses to live in and raise their families."

Mence says the key point the Property Council is seeking to get across to Government, council, local bodies and all sectors of the community is: "How can we provide for the growth of the New Zealand economy by facilitating accommodation for business and industry?"

While the Property Council has already had significant "buy in" from the Government and local bodies in regards to matters that need addressing, more work is required of the council to provide convincing information about things like heritage issues and earthquake prone buildings, Mence says.

"This is a thing we have been going on about for ages - and it's a fundamental issue. If you look at provincial towns like Kaitaia, Kaikohe, Dargaville and Matamata there are a whole lot of older heritage buildings in these rural centres where the owners can't afford to bring them up to the standards required by current seismic regulations. Even if the owners could do that, the cost of the remedial work is likely to be higher than the value of the buildings on completion.. The end result will be that the owners are just going to walk away from their properties and tell the local councils to keep them. If the stringent seismic strengthening requirements remain in place as they are, and the owners don't get some taxation or depreciation relief, we are going to see abandoned buildings in towns and cities throughout New Zealand because its uneconomic to upgrade them."

Another area of concern for the Property Council is reforming the Resource Management Act.

"Clearly what we've got now doesn't work," Mence says. "We've got businesses constrained from expansion because of RMA requirements and homeowners taking an impossible length of time just to get resource consent just to extend a garage. Conversely Ports of Auckland can take 10 per cent of the width of the Waitemata Harbour for Bledisloe Wharf extensions without consulting with anybody."

Development contributions levied by local bodies are another factor restricting commercial property development and therefore the economy. "The fact is that all the costs involved in construction of properties for businesses result in higher rents at the other end. So if we add an extra year onto a project as a result of having to get resource consent or the added costs for development contributions, those are inhibitors to business development and expansion."

Mence says a significant problem is that many councils view levying development contributions from property developers as a source of generating money and balancing their budgets instead of focusing on encouraging business development. "Development contributions become a means to grab money rather than being seen as a cost benefit of providing services to the community. We end up with crazy situations like a commercial property developer being charged a development contribution that will go towards the construction of a bridge that won't be built for five years."

While the Property Council hasn't yet factored immigration into the issues it is speaking out on, Mence feels that provincial areas could adopt better policies to attract more immigrants rather than most of the new arrivals settling in Auckland with its gridlocked roading system, dwindling supply of development land and sky-rocketing housing prices.

"As long as we have provincial areas that provide significant barriers in terms of business location, land development and even residential housing, then new immigrants won't go there," Mence says.

He says environmental issues are also important when it comes to property developments. "A big part of our enjoyment of living in New Zealand relates to the beauty of the natural environment and what it has to offer. Our members in the Property Council are not advocating the by-passing of environmental considerations in relation to development projects but we need to free up the log-jam in terms of the time and cost of getting approval relating to environmental issues."

Mence says the issues that concern the Property Council have the power to hold New Zealand back from the rest of the world, or launch the country into the future where it can compete with global partners. "We need serious movement on all these fronts," he says.

"We must hold politicians to account by encouraging decisions that are not populist and short-sighted which is the nature of democratic processes, but decisions that provide long-term gains benefiting the whole country. That is why it is vital for the Government to have private sector property professionals on board to provide access to information on market and ground realities, otherwise not readily available.

"We have to ensure any decisions made are evidence-based and not emotionally driven and we must help officials make them following rigorous consideration of all factors - accounting for intended and unintended consequences."

Commencing with an engineering background, Mence brings with him an impressive 34 years of experience in the property industry working with Progressive Enterprises, Challenge Properties, Richard Ellis and Green and McCahill.

He joined Armstrong Jones (New Zealand) in 1994 and was appointed General Manager of ING Property Trust in 2007. Instrumental in the rebranding and internalisation of the company's management, he was appointed chief executive of the business in 2009.

Argosy Property Limited, which Mence heads, is one of the largest diversified property funds listed on the New Zealand Stock Exchange. It has a $1.226 billion portfolio of 66 properties across the retail, office and industrial sectors.

Mence is a Fellow of the Property Institute and is a past lecturer in Advanced Property Management at the University of Auckland. In 2013 he was honoured with the Stuart McIntosh award in recognition of his contribution to the university.

As the incoming Property Council president, he takes over from Tony Sewell, chief executive Ng?i Tahu Property Ltd, who served a three year term.