Business bosses say city requires building boom

Ariel shot of Rotorua.

Bay of Plenty region's strong economic and employment confidence is largely the result of Rotorua's "gang-buster" growth, business experts say.

But Rotorua Chamber of Commerce chief executive Darrin Walsh said in order to make the growth sustainable, the city needs more housing and more visitor accommodation.

Darrin Walsh.

New figures on the region's economic and employment confidence for the last quarter were released by Westpac yesterday, showing the Bay of Plenty performing strongly relative to five-year averages.

The report showed economic confidence had dropped slightly from the previous quarter, going from optimists outweighing pessimists by 41 percentage points to 34.7 percentage points.

Despite the slight decline the region was still the most positive in the country.

Unemployment continues to plummet in the region, reaching 4.6 per cent in the March quarter, the second lowest reading in the country.

According to the report Rotorua in particular had not seen the tourism growth expected but that was changing.

"Occupancy rates in Rotorua year-round are approaching 80 per cent, implying capacity constraints may become a hindrance to growth soon," it said.

Mr Walsh said the report was evidence of the economic growth being seen and felt in the city.

"In the past I have been reluctant to comment on Bay of Plenty figures as they were more reflective of the growth happening in Tauranga but now I would confidently say Rotorua has been a major contributor to these figures.

"The report shows a slight drop in economic confidence but Rotorua still seems to be in a pretty strong position," he said.

"Tauranga has been experience a growth buzz for the last three or four years so that may be waning a little whereas Rotorua was lagging behind and has only started seeing major growth and confidence in the last 12 months."

Mr Walsh said the local economy was going "gang-busters" and that was a result of a number of major sectors doing well.

"We are having a property boom with more people coming into the city.

"We are also seeing huge growth in the tourism sector," he said.

"Economic confidence is high so businesses are investing internally, contributing to the growth and as a result we're also seeing strong employment confidence."

Mr Walsh said he thought the growth was sustainable, as long as there were more developments in the city.

"We have had some great investment in commercial developments but what we need now is more housing to ease the shortage we're experiencing.

"We know people want to move here, but they need houses to move into. A building boom will allow the growth we are having now to be sustainable. The same goes for visitor accommodation. We need more because at the moment we are struggling to meet demand. New hotels are being built which will only go towards improving Rotorua's economy."

Dave Donaldson.

Rotorua Lakes Council deputy mayor and economic growth portfolio leader Dave Donaldson said the figures were unsurprising, including the comments about the shortage of tourist accommodation.

"At peak periods Rotorua has some real capacity issues and on top of that, our shoulder season has become broader as we see the city go from traditionally seasonal to a year-round tourism destination.

"We are lacking in high end accommodation so we are trying to facilitate investment in that area."