QUEENSTOWN LAKES DISTRICT COUNCIL - Mt Cardrona Station Of - Queenstown ...

 
QUEENSTOWN LAKES DISTRICT COUNCIL - Mt Cardrona Station Of - Queenstown ...
A Market Demand Study prepared for
QUEENSTOWN LAKES DISTRICT
                COUNCIL
                                     Of
              Mt Cardrona Station
                                    Date
                            October 2006
QUEENSTOWN LAKES DISTRICT COUNCIL - Mt Cardrona Station Of - Queenstown ...
Market Demand Study
                                                                                                                                                                  Mt Cardrona Station
                                                                                                                                                                        October 2006

                                                                                      Contents
                                                                                                                                                                                     Page
                                                                                      1          Executive Summary .................................................................. 4
                                                                                                 1.1      Opinion......................................................................... 4
                                                                                                 1.2      Overview ....................................................................... 5
                                                                                                 1.2      Study Objectives ............................................................ 6
                                                                                                 1.3      Background ................................................................... 6
                                                                                                 1.4      Demand Projections....................................................... 8
                                                                                                 1.5      Limitations ................................................................... 13
                                                                                                 1.6      Authors........................................................................ 13
                                                                                      2          Introduction ........................................................................... 14
                                                                                                 2.1      Background ................................................................. 14
                                                                                                 2.2      Objectives.................................................................... 14
                                                                                                 2.3      Scope .......................................................................... 15
                                                                                                 2.4      Critical Assumption ...................................................... 16
                                                                                      3          Methodology ......................................................................... 17
                                                                                                 3.1      Introduction ................................................................. 17
                                                                                                 3.2      Primary Research ......................................................... 17
                                                                                                 3.3      Secondary Research ..................................................... 18
                                                                                      4          Background ........................................................................... 19
                                                                                                 4.1      Location Analysis – Cardrona Valley, including the existing
                                                                                                          Village and Study Area................................................. 19
                                                                                                 4.2      Site Analysis – Study Area............................................. 21
                                                                                                 4.3      Population Profile......................................................... 23
                                                                                                 4.4      Key Findings ................................................................ 24
                                                                                      5          Development Potential and Site Capacity................................ 25
                                                                                                 5.1      Overview ..................................................................... 25
                                                                                                 5.2      Site Capacity / Building Typology ................................. 26
                                                                                                 5.3      Key Points .................................................................... 27
                                                                                      6          Residential Analysis................................................................ 28
                                                                                                 6.1      Overview ..................................................................... 28
                                                                                                 6.2      Catchment Methodology .............................................. 28
                                                                                                 6.3      Population Analysis ...................................................... 29
                                                                                                 6.4      Homeownership / Affordability..................................... 34
                                                                                                 6.5      Absentee Owners......................................................... 36

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QUEENSTOWN LAKES DISTRICT COUNCIL - Mt Cardrona Station Of - Queenstown ...
Market Demand Study
                                                                                                                                                                 Mt Cardrona Station
                                                                                                                                                                       October 2006

                                                                                                 6.6      Property Supply............................................................ 38
                                                                                                 6.7      New Residential sections and Apartment Absorption ..... 39
                                                                                                 6.8      Remaining Capacity..................................................... 41
                                                                                                 6.9      Proposed Development – Residential Demand Forecast 42
                                                                                      7          Tourism Analysis - Short Stay Visitors ...................................... 45
                                                                                                 7.1      Visitor Analysis – QLDC Level....................................... 45
                                                                                                 7.2      Short Stay Accommodation Market............................... 54
                                                                                                 7.3      Short Stay Demand Drivers........................................... 59
                                                                                                 7.4      Key Findings – Short Stay Visitors.................................. 70
                                                                                                 7.5      Proposed Development – Short Stay Accommodation
                                                                                                          Forecast....................................................................... 71
                                                                                      8          Business Analysis - Long Stay Workers.................................... 75
                                                                                                 8.1      Overview ..................................................................... 75
                                                                                                 8.2      Worker Market ............................................................. 75
                                                                                                 8.3      Proposed Development – Long Stay Accommodation
                                                                                                          Forecast....................................................................... 77
                                                                                      9          Overseas Experience.............................................................. 80
                                                                                                 9.1      Overview ..................................................................... 80
                                                                                                 9.2      Observations ............................................................... 80
                                                                                                 9.3      Key Findings ................................................................ 82
                                                                                      10         Conclusion ............................................................................ 84
                                                                                                 10.1 Indicative Demand & Timing/Staging of Development .. 84
                                                                                                 10.2 Mt Cardrona Station - CBRE Opinion .......................... 86

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                                                                    1                 Executive Summary
                                                                    1.1               Opinion
                                                                                      We summarise our key opinions as follows:

                                                                                      •       CBRE’s demand analysis indicates that demand for residential and
                                                                                              visitor/worker accommodation in Cardrona will be considerably
                                                                                              greater over the 18 years between 2009 and 2026 than MCS’s
                                                                                              proposed capacity of 969 units. In our opinion therefore, there will
                                                                                              be sufficient demand to facilitate the successful development of the
                                                                                              wider Cardrona area, including MCS and the existing village.
                                                                                      •       In our opinion, the demand profile for the area should enable the
                                                                                              creation of an integrated development catering for a wide range of
                                                                                              uses which should, over time, lead to a vibrant and sustainable
                                                                                              year round community.
                                                                                      •       We would not expect the feasibility of MCS to be at the expense of
                                                                                              development of Cardrona Village. To the contrary, we would
                                                                                              expect the above described demand shift to have a positive impact
                                                                                              on demand for property at Cardrona Village.
                                                                                      •       Cardrona has the necessary attributes to facilitate development of
                                                                                              an integrated and sustainable village over the medium/long term.
                                                                                      •       At present, the valley has very much a winter focus, but we are of
                                                                                              the opinion that over the medium term, summer activities can be
                                                                                              enhanced and developed. This will result in a less seasonal
                                                                                              demand profile, more in line with Queenstown and Wanaka, and
                                                                                              more supportive of a sustainable village environment. This
                                                                                              expectation is consistent with overseas experience. Furthermore,
                                                                                              we note that within a 20 – 55 minute drive, there are a wide range
                                                                                              of summer and further winter activities as well as commercial and
                                                                                              township amenities.
                                                                                      •       Cardrona currently has a population of 66 and any incremental
                                                                                              growth from this base will not be material. However, as Cardrona
                                                                                              develops, spear-headed by development of MCS, we would expect
                                                                                              a “demand shift”, and comparatively material new demand. The
                                                                                              recent development of Benbrae in Cardrona Village illustrates the
                                                                                              potential demand shift that can occur. This high density
                                                                                              development of 90 proposed units has already achieved (within a
                                                                                              comparatively short time frame) 67 sales and presales. This
                                                                                              almost doubles the number of units in Cardrona. In our opinion,
                                                                                              within 18 years of the commencement of MCS (by 2026), there will
                                                                                              be more than sufficient demand to absorb the development
                                                                                              capacity of both MCS and Cardrona Village. As a result of this

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                                                                                              demand, and assuming adequate design flexibility to meet market
                                                                                              demand sectors, development of MCS would be feasible.

                                                                                      The above opinions are based on forecasts which rely on our research
                                                                                      and analysis of the factors likely to impact the demand for development
                                                                                      at Cardrona Valley. They reflect our best estimate of future demand
                                                                                      relative to our knowledge as at the date of this report. However, like
                                                                                      any forecast, the figures presented and relied upon in forming our
                                                                                      opinions represent only one permutation of many possible future
                                                                                      scenarios. To this extent, our opinions are indicative estimates of
                                                                                      potential future demand at Cardrona Valley.

                                                                    1.2               Overview
                                                                                      Mount Cardrona Station (“MCS”) is a substantial land holding located
                                                                                      at the base of Cardrona Ski field and with frontage to Cardrona Valley
                                                                                      Road.

                                                                                      The land already has existing use development rights, however, the
                                                                                      owners of Mt Cardrona Station have reached agreement with
                                                                                      Queenstown Lakes District Council (“QLDC”) to proceed with a plan
                                                                                      change to improve the form and quality of future development.

                                                                                      At this preliminary stage, the exact form and location of the new zone
                                                                                      has not been confirmed. However, the Plan Change would provide
                                                                                      zoning to encourage visitor accommodation and residential
                                                                                      development while minimising effects on the impressive landscapes in
                                                                                      the vicinity of the site.

                                                                                      The following table compares the future capacity of Cardrona Village
                                                                                      and the proposed capacity of MCS, either through a plan change or
                                                                                      development of the existing zone.

                                                                                                                          Cardrona                      Mt Cardrona Station
                                                                                        Type                               Village                  Existing Zone        Plan Change
                                                                                                                                              Scenario 1       Scenario 2
                                                                                        Visitor Accommodation                  -                 372             1,259            595*
                                                                                        Residential                            -                 452              213             374
                                                                                        Total                                 574†               824             1,472             969
                                                                                       * includes high density residential
                                                                                       † Additional development capacity - may be over stated due to the inclusion of potential development on
                                                                                       a floodplain
                                                                                       Source: RA Skidmore Urban Design Ltd

                                                                                      It is acknowledged that QLDC wish to ensure that MCS and the existing
                                                                                      Cardrona Village develop in a complementary way, which enables a
                                                                                      sustainable and integrated community to establish within the valley.

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                                                                    1.2               Study Objectives
                                                                                      The agreed objective of this study is as follows:

                                                                                      Based on an analysis of current and projected demand, as well as the
                                                                                      shift in demand that additional development at Cardrona may create,
                                                                                      determine the feasibility of the proposed development and answer the
                                                                                      following questions:

                                                                                      Will there be sufficient demand to feasibly support:

                                                                                      • Transient accommodation (quality hotel, mid market hotel, budget
                                                                                        or backpacker accommodation)
                                                                                      • Staff accommodation
                                                                                      • Residences for permanent (owner occupier) accommodation
                                                                                      • Residences for owner occupier holiday accommodation
                                                                                      • Other uses as proposed, or potentially permissible.

                                                                                      In addition, provide advice as to the likely uptake of the proposed
                                                                                      development to the extent that this may impact staging from a market
                                                                                      demand perspective.

                                                                                      Please note that our analysis has not explicitly considered the
                                                                                      requirement for commercial facilities. The objective of this study was to
                                                                                      determine the feasibility of the proposed development. While
                                                                                      commercial facilities are obviously integral to the success of an
                                                                                      integrated village, the size and extent of commercial facilities is directly
                                                                                      correlated to the creation of a sustainable village, with a mix of
                                                                                      permanent residents and short stay occupants. This report does
                                                                                      address our opinion as to whether a sustainable village can be created
                                                                                      at MCS.

                                                                    1.3               Background

                                                                    1.3.1             Location
                                                                                      Cardrona is located in a spectacular mountain environment with
                                                                                      excellent proximity to a range of winter activities. It is en-route between
                                                                                      two larger and established townships, Queenstown and Wanaka. MCS
                                                                                      features an elevated plateau well suited for development.

                                                                                      The current permanent population of Cardrona is 66 and existing
                                                                                      development in Cardrona Village is a mix of short stay and owner
                                                                                      occupier accommodation. The extent of this development is relatively
                                                                                      limited, with less than 25% of the capacity of the existing village having
                                                                                      been developed. The village currently relies heavily on the surrounding

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                                                                                      winter activity, with limited existing summer and shoulder season
                                                                                      attractions.

                                                                                      While Cardrona has a strong history, extending back to the late 1800s,
                                                                                      there is limited ability for tourists to observe and participate in the
                                                                                      heritage of the valley.

                                                                                      The lack of development and infrastructure at Cardrona means that
                                                                                      skiers or workers in the valley predominantly travel from Wanaka and
                                                                                      Queenstown.

                                                                    1.3.2             Permanent Residents
                                                                                      QLD has experienced strong growth since 1996. QLDC is anticipating
                                                                                      continued strong resident population growth over the next 20 years, with
                                                                                      the population more than doubling over this period.

                                                                                      Absentee owners represent a material proportion (estimated by CBRE to
                                                                                      be approximately 60% to 80%) of purchases of property stock in the QLD,
                                                                                      in new, integrated mixed use developments.

                                                                    1.3.3             Tourism
                                                                                      Not surprisingly, skiing is the overwhelming driver for winter visits.
                                                                                      However, Queenstown has a strong and more sustained tourism period
                                                                                      through the summer months. The greater QLD market exhibits a peak
                                                                                      summer period of around six months, winter period of three months, and
                                                                                      a three month off-peak/shoulder period.

                                                                                      Given the range of existing winter activities at Cardrona, demand for
                                                                                      accommodation facilities in Cardrona during the three peak winter
                                                                                      months (July-September) is already established. Indeed, the greater
                                                                                      Wanaka area (including Treble Cone, Cardrona, Snow Farm, and Snow
                                                                                      Park) has a 50% market share of ski field visitor days in the QLD
                                                                                      (335,000) with the balance (335,000) being within Wakatipu at
                                                                                      Remarkables and Coronet Peak.

                                                                                      Forecast visitor night growth in QLD is expected to increase 3.4% per
                                                                                      annum through to 2012, compared to the New Zealand average of
                                                                                      2.9%. This growth expectation is consistent with the expected growth in
                                                                                      passenger numbers at Queenstown International Airport , where within 6-
                                                                                      7 years, it is anticipated that there will be daily flights from Australia.
                                                                                      Similarly, while Wanaka Airport is at present utilised mainly for non-
                                                                                      scheduled charter flights, it is anticipating material passenger growth and,
                                                                                      ultimately, by around 2021, scheduled Boeing 737 and AS320 flights.

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                                                                                      Locally, the Snow Farm and Park in Cardrona have experienced very
                                                                                      strong visitor growth over recent years with 60,000 skier days in 2006.
                                                                                      The existing (comparatively small) horse-trekking facility in Cardrona
                                                                                      attracts some 3,500 visitors annually. Other existing summer attractions
                                                                                      include limited walkways and mountain bike tracks.

                                                                    1.3.4             Overseas Experience
                                                                                      We are privy to a report prepared by Ecosign Mountain Resort Planners
                                                                                      Ltd dated September 2006. This report seeks to draw comparisons
                                                                                      between MCS and other ski resorts in Australia, Canada, and the
                                                                                      United States. Key findings from this evaluation are:

                                                                                      •       It appears that when ski resorts are in their initial development
                                                                                              stages, they primarily rely upon winter season demand. As they
                                                                                              mature, it is apparent that more summer orientated facilities are
                                                                                              progressively developed to decrease seasonality.
                                                                                      •       Most ski resorts are characterised by a low permanent resident
                                                                                              population (18 to 50%).
                                                                                      •       The growth and development of resorts varies. For example, Sun
                                                                                              Peaks in Canada (which has an approved Master Plan for up to
                                                                                              6,000 units) had 68 dwelling units in 1994, and this had grown to
                                                                                              1,435 by 2005. Similarly, in the Three Sisters Resort in Canada
                                                                                              (which has a Master Plan for development of 4,000 units), 1,100
                                                                                              dwelling units were developed between 1996 and 2005, with
                                                                                              another 250 currently under construction.
                                                                                      •       The number (supply) of accommodation units typically represents
                                                                                              between approximately 0.4% and 0.6% of skier numbers.

                                                                    1.4               Demand Projections
                                                                                      In establishing our demand projections, we have individually modelled
                                                                                      our forecasts for residential accommodation, short stay visitor, and
                                                                                      worker accommodation demand, and have then combined these findings
                                                                                      to determine an overall demand profile and an estimate of the
                                                                                      cumulative demand for accommodation units (whether resident, visitor, or
                                                                                      worker) in Cardrona Valley. These forecasts have then been used to
                                                                                      analyse and consider the probable staging of development.

                                                                                      Fundamentally, our demand projections reflect the fact that:

                                                                                      •       There is already sufficient (and growing) demand to support a
                                                                                              material demand shift in supply in Cardrona Valley over the three
                                                                                              month ski season from July to September, as evidenced by the
                                                                                              Benbrae development as previously discussed.

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                                                                                      •       Within QLD, there is a considerable amount of travelling between
                                                                                              ski fields, whereas MCS and Cardrona Village can provide
                                                                                              accommodation immediately at the base of three snow related
                                                                                              activities.
                                                                                      •       There is material population growth expected for QLD. In our
                                                                                              opinion, given the established attraction of Cardrona and
                                                                                              assuming a good development strategy for greater Cardrona,
                                                                                              Cardrona Valley could capture a reasonable percentage of this
                                                                                              new growth. However, the extent of medium to long term market
                                                                                              share growth will depend on the ability to develop summer
                                                                                              demand drivers.
                                                                                       •      In our opinion, development of summer attractions at Cardrona
                                                                                              can reasonably be expected to be possible, given overseas
                                                                                              experience and the experience at QLD and Wanaka, and also
                                                                                              given the real potential to develop/establish:

                                                                                              o      A heritage profile for the valley
                                                                                              o      Walkways
                                                                                              o      Mountain biking
                                                                                              o      4WD tracks
                                                                                              o      Year round hospitality businesses based on the convention /
                                                                                                     conference, and spa markets
                                                                                              o      Other outdoor related attractions, and potentially
                                                                                              o      A golf course.

                                                                                      Our detailed analysis and findings are found in Sections 6.9, 7.5 and
                                                                                      8.3 respectively, however for each of the key demand sectors, we note
                                                                                      as follows:

                                                                    1.4.1             Residential Demand – Permanent and Non-permanent (absentee)
                                                                                      The fundamental assumptions in determining residential demand are as
                                                                                      follows:

                                                                                      •       We have considered the main catchment area population growth
                                                                                              for QLD (based on QLDC projections of approximately 1,000 p.a.)
                                                                                              and, based on a household density of 2.4 people per household,
                                                                                              estimated the number of new households in QLDC to meet this
                                                                                              demand.
                                                                                      •       We consider that (based on our comments in Section 6.9)
                                                                                              Cardrona Valley would capture approximately 4% of all new
                                                                                              households (one in 25) in the main QLD catchment area,
                                                                                              particularly if some of the housing satisfies the medium to lower
                                                                                              value market which will improve the liquidity of the development

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                                                                                              product. We would expect the total market share for Cardrona to
                                                                                              grow to between 6 and 7% as development establishes and a
                                                                                              demand shift occurs.
                                                                                      •       We have assumed that 35% of all residential unit sales will be to
                                                                                              permanent residents (owner occupiers), with the balance being
                                                                                              absentee owners (see section 6.5). We are aware that other
                                                                                              studies relative to Wanaka estimate that approximately 50% of all
                                                                                              residential unit sales will be to permanent residents (owner
                                                                                              occupiers) – while we do not concur with this estimate we have
                                                                                              illustrated the impact of a 50/50 split on demand for
                                                                                              comparative/sensitivity analysis purposes.
                                                                                      •       Our forecasts represent demand for between 50 and 97 additional
                                                                                              units per annum over the forecast period, which compares
                                                                                              favourable with Cromwell which experienced an average annual
                                                                                              take-up over the 5 years between 2001 and 2005 of 71, or 14% of
                                                                                              sales in the main catchment area. It also compares favourably
                                                                                              with the number of units added by the Benbrae development in
                                                                                              Cardrona Village (40 units completed thus far and 50 more to be
                                                                                              built – 74% sold).
                                                                                      •       We forecast total residential demand (permanent and absentee
                                                                                              owners) at 734 units by 2018 and 1,493 units by 2026.

                                                                    1.4.2             Visitor/Short Stay
                                                                                      We have considered this sector of the market under two sections,
                                                                                      namely demand for hotel style accommodation and demand for
                                                                                      budget/backpacker accommodation.

                                                                                      We have assumed that much of the non- permanent residential housing
                                                                                      (absentee ownership), as discussed above, will be sold with the ability to
                                                                                      be within a ”management pool” for short/medium stay
                                                                                      accommodation, as is typical in many modern resorts in New Zealand
                                                                                      and Australia. As a result of this structure, dedicated short stay
                                                                                      accommodation demand (such as a purpose built hotel unit) is to a
                                                                                      large extent offset by the non-permanent residential accommodation
                                                                                      that is likely to be available under a serviced apartment model.

                                                                                      Bearing this in mind, our key assumptions are noted as follows:

                                                                                      •       We are aware of actual QLD hotel and backpacker stay units
                                                                                              nights (see section 7.1.2), and have forecast these over the forecast
                                                                                              period.

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                                                                                      •       We forecast that Cardrona will capture 2% of the total QLD hotel
                                                                                              and backpacker markets, rising to and stabilising at just under 5%
                                                                                              by 2016.
                                                                                      •       We consider a hotel or backpacker operator would accept a 52%
                                                                                              initial occupancy rate (Year 1) with an expectation that this would
                                                                                              increase to around 70% within 5 years.
                                                                                      •       We forecast demand for Cardrona Valley for around 340 hotel
                                                                                              rooms and 156 backpacker units by 2018, and 536 hotel rooms
                                                                                              and 206 backpacker units by 2026.

                                                                    1.4.3             Worker Accommodation
                                                                                      We estimate that approximately 51,000 worker days (accommodation
                                                                                      nights) would exist in 2009 in Cardrona, with this demand resulting
                                                                                      from employees associated with skiing, the proving ground,
                                                                                      commercials/films and on site hotel/restaurant workers.

                                                                                      We expect that the quality of accommodation demanded by these
                                                                                      workers will vary between mid to high end accommodation, and budget
                                                                                      accommodation, with the latter being in greater demand. 51,000
                                                                                      worker days results in feasible demand of 97 accommodation units in
                                                                                      2009, rising, conservatively, to 111 units by 2018 and 125 by 2026.

                                                                                      The growth in demand for worker accommodation is low partly because
                                                                                      part of this demand will be able to be satisfied by the residential
                                                                                      accommodation provided within the development that (as discussed),
                                                                                      when not occupied by owners, is available within a “management pool”
                                                                                      for short/medium stay accommodation.

                                                                    1.4.4             Overall Demand and Possible Supply/Staging
                                                                                      The following table summarises our projections for the resident/visitor
                                                                                      and worker demand components for Cardrona:
                                                                    2009    2010    2011    2012     2013   2014   2015    2016    2017     2018    2019   2020   2021   2022   2023   2024      2025       2026

             Permanent resident take up             annual            17     20      23      20      24      30     32      34         27     29     30     32    34      29     31    34          36         39
                                                    cumulative        17     37      60      81      105    135     167     201       228    257    287    320    354    383    414    448        484        523

             Non permanent Resident take up         annual            32     37     43      38       45      55     59      63         51     54     57     60    63      54     58    62          67         72
                                                    cumulative        32     69     112     150      195    250     309     373       423    477    534    594    657    711    769    831        898        971

             T otal residen tial take up            annua l           50      57     66     58       70     85      91      97         78    83      87     92     97     83     89     96        103       112
                                                    cum ulative       50     106    172     230      300    385     476    573        651   734     821    913    1010   1094   1183   1279      1382       1493

             M id /high end sho rt sta y accom .    annua l           86      14     16     25       27     37      44      54         18    19      20     21    22     24      25    26         28         30
                                                    cum ulative       86     100    116     141      168    205     249    303        321   340     360    381    403    427    452    478        506        536

             M id /high end worker accom.           annua l           42     1       1        1       1      1       1      1         1      1       1      1       1      1     1      1           1          1
                                                    cum ulative       42     43      43      44      45     45      46      47        47     48      49     50     50     51     52     53         53         54

             B udg et sho rt sta y acco m.          annua l           56     7       5       10       8     16      20      23         5     5       5      6      6      6      6      6          7          7
                                                    cum ulative       56     63      69      78      86     103     122    146        151   156     162    167    173    179    185    192        199        206

             B udg et wo rke r accom .              annua l           97     1       1       1        2      2       2      2          2     2       2      2      2      2      2      2          2          2
                                                    cum ulative       97     98     100     101      103    104     106    108        109   111     112    114    116    118    119    121        123        125

             Total                                  annua l
                                                    cum ulative      330    410     500     595      702    842    1,000   1,177   1,280    1,389   1504   1625   1753   1868   1991   2123      2263       2414
                                                                                                                                                                                             Source: CB Richard Ellis

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                                                                                      In summary, we forecast that there is demand for 1,389 units in
                                                                                      Cardona (including MCS and Cardrona Village) within a 10 year time
                                                                                      frame and 2,414 units by 2026. For comparative/sensitivity analysis
                                                                                      purposes, if we assume that the split between permanent and absentee
                                                                                      owners is 50/50, the total demand falls to 1,169 units within a 10 year
                                                                                      time frame and 1,966 units by 2026.

                                                                                      Our forecast for development staging/timing (supply) is shown below:
                                                                               2009   2010   2011    2012   2013   2014   2015   2016    2017    2018    2019    2020    2021    2022    2023    2024        2025       2026
     Residential Dem and
       annual                                                                   50     57     66     58     70      85    91     97      78      83       87     92       97      83      89      96         103         112
       cum ulative                                                              50    106     172    230    300    385    476    573     651     734     821     913     1010    1094    1183    1279        1382       1493
       Residential Supply
       residential exc.non permanent units available for short stay (66.6%)     39    44       51     45    54      67    71      76      61      65      68      72      76      65      70      75          81          87
       non permanent residential units available for short stay (33.3%)         11    12       14     13    15      18    20      21      17      18      19      20      21      18      19      21          22          24

       Total Residential Supply
       annual                                                                  50     57      66     58     70     85      91    97       78     83      87      92       97      83      89      96          103       112
       cum ulative                                                             50     106     172    230    300    385    476    573     651     734     821     913     1010    1094    1183    1279        1382       1493

     Mid to high end short/long stay demand
       Short stay visitor                                                       86    100     116    141    168    205    249    303     321     340     360     381     403     427     452     478         506         536
       Long stay worker                                                         42     43     43     44     45      45     46    47       47      48      49     50      50      51       52      53          53          54
       Total mid to high end short/long stay demand                            128    142     159    185    213    250    295    350     368     388     409     430     453     478     504     531         560         590
       Less non permanent residential units available for short stay (33.3%)    11     23     37     50     65      83    103    124     141     159     178     198     219     237     256     277         299         324
       Purpose built mid to high end short/long stay demand
       annual                                                                  117     2       3     13     12      19    25     34       2       2       2       2       2       6       6       6           6           6
       cumulative                                                              117    119     122    135    148    167    192    226     227     229     231     233     235     241     247     254         260         266

       Purpose built mid to high end short/long stay supply
       annual                                                                  125                          75                            50
       cum ulative                                                             125    125     125    125    200    200    200    200     250     250     250     250     250     250     250     250         250         250

     Budget short/long stay demand
       Short stay visitor                                                       56    63      69      78    86     103    122    146     151     156     162     167     173     179     185     192         199         206
       Long stay worker                                                         97    98      100    101    103    104    106    108     109     111     112     114     116     118     119     121         123         125
       Total budget short/long stay demand
       annual                                                                  153     9       7     11     10      18    21     25       7       7       7       7       8       8       8       8           9           9
       cumulative                                                              153    162     168    180    189    207    228    253     260     267     274     281     289     297     305     313         322         331

       Purpose built budget short/long stay supply
       annual                                                                  175                                 75                                    75
       cum ulative                                                             175    175     175    175    175    250    250    250     250     250     325     325     325     325     325     325         325         325

     Total Supply
      annual                                                                   350    57       66    58     145    160    91      97     128      83     162      92      97      83      89      96         103         112
      cum ulative                                                              350    406     472    530    675    835    926    1,023   1,151   1,234   1,396   1,488   1,585   1,669   1,758   1,854      1,957      2,068
     Note: some rounding errors apply                                                                                                                                                                    Source: CB Richard Ellis

                                                                                      We note that:

                                                                                      •       Based on our assumptions with development staging, and
                                                                                              assuming a development start date of 2009, we forecast total
                                                                                              feasible supply to reach 1,234 units by the end of 2018 and 2,068
                                                                                              units by 2026. The forecast supply within the ten year horizon is
                                                                                              less than the forecast demand (of 1,389 units) as a result of the
                                                                                              likely “stepwise” (or “lumpy”) nature of supply relative to demand.
                                                                                      •       Notwithstanding that resorts such as that proposed at MCS require
                                                                                              established summer activities for overall success, it is interesting to
                                                                                              note the relationship evident at overseas resorts between skier
                                                                                              numbers and the number of accommodation units for ski resorts.
                                                                                              The expected total feasible supply of 1,234 units by 2018

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                                                                                              represents 0.6% of current skier numbers (which we expect to
                                                                                              increase over the next 10 years) in greater Cardrona (Cardrona
                                                                                              together with the Snow Farm and Park). These parameters are
                                                                                              comfortably in line with the experience of ski-focussed resorts
                                                                                              overseas, particularly given that as skier numbers increase, this
                                                                                              ratio will reduce.

                                                                    1.5               Limitations
                                                                                      Reliance upon this document by anyone other than Queenstown Lakes
                                                                                      District Council and the proprietors of Mount Cardrona Station is not
                                                                                      authorised by CB Richard Ellis and CB Richard Ellis is not liable for any
                                                                                      loss arising from such use or reliance. The document should not be
                                                                                      reproduced without our written authority.

                                                                                      This document may contain information which is directly derived from
                                                                                      other sources, without verification by us. Where the content of this
                                                                                      document has been derived, in whole or in part, from sources other
                                                                                      than CB Richard Ellis, CB Richard Ellis does not warrant or represent
                                                                                      that such information is accurate or correct.

                                                                                      Our assessments and forecasts rely to a large extent on information
                                                                                      which is directly derived from other sources, without verification by us.
                                                                                      Additionally, it should be noted in relation to the assessments and
                                                                                      forecasts contained in the report that some variables cannot be
                                                                                      estimated with certainty and our assessments and forecasts represent
                                                                                      assumptions which are not guaranteed to hold. Accordingly, our
                                                                                      assessments and forecasts should only be considered in an illustrative
                                                                                      rather than definitive context and no warranties are provided as to their
                                                                                      actual and eventual accuracy.

                                                                    1.6               Authors
                                                                                      This report was prepared by:

                                                                                       1. John Schellekens, Senior Director Valuation and Advisory Services.
                                                                                          John holds a B.Com (VPM) and a Master of Property Studies (with
                                                                                          Distn) from Lincoln University and is a Senior Member of the New
                                                                                          Zealand Property Institute.

                                                                                       2. Zoltan Moricz, Director Research and Consultancy. Zoltan holds a
                                                                                          MA (1st Class Honours) from the University of Auckland and a Post
                                                                                          Graduate Diploma in Finance from Massey University.

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                                                                    2                 Introduction
                                                                    2.1               Background
                                                                                      MCS is a substantial land holding located at the base of Cardrona Ski
                                                                                      field and with frontage to Cardrona Valley Road.

                                                                                      The land already has existing development rights, however, the owners
                                                                                      of Mt Cardrona Station have reached agreement with Queenstown
                                                                                      Lakes District Council (QLDC) to proceed with a plan change to
                                                                                      improve the form and quality of future development.

                                                                                      At this preliminary stage the exact form and location of the new zone
                                                                                      has not been confirmed. However, based on urban design analysis the
                                                                                      Plan Change is likely to provide zoning to encourage a mix of visitor
                                                                                      accommodation and residential development while minimising effects
                                                                                      on the impressive landscapes in the vicinity of the site.

                                                                                      Objectives have been agreed between QLDC and MCS as per a report
                                                                                      to Strategy Committee of 12 October 2005.

                                                                    2.2               Objectives
                                                                                      The agreed objective of this study is as follows:

                                                                                      Based on an analysis of current and projected demand, as well as the
                                                                                      shift in demand that additional development at Cardrona may create,
                                                                                      determine the feasibility of the proposed development and answer the
                                                                                      following questions:

                                                                                      Will there be sufficient demand to feasibly support:

                                                                                      • Transient accommodation (quality hotel, mid market hotel, budget
                                                                                        or backpacker accommodation)
                                                                                      • Staff accommodation
                                                                                      • Residences for permanent (owner occupier) accommodation
                                                                                      • Residences for owner occupier holiday accommodation
                                                                                      • Other uses as proposed, or potentially permissible.

                                                                                      In addition, provide advice as to the likely uptake of the proposed
                                                                                      development to the extent that this may impact staging from a market
                                                                                      demand perspective.

                                                                                      It was agreed that CBRE would complete a detailed analysis of supply in
                                                                                      Cardrona and the greater Queenstown Lakes District (QLD) area,
                                                                                      however, undertake only a high level consideration of supply in the
                                                                                      balance of the QLD area. As the proposal is a semi “greenfields”

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                                                                                      development and is unique, being a proposed largely self-contained
                                                                                      and freestanding village with its own infrastructure, supply analysis
                                                                                      across the QLD area was not a focus of this study.

                                                                                      In terms of determining “feasibility”, we were to provide our advice from
                                                                                      a high level perspective, but with opinions based on thorough
                                                                                      underlying research.

                                                                                      We acknowledge that the draft objectives agreed between QLDC and
                                                                                      MCS are:

                                                                                       •      To ensure that development within the zone has a significantly
                                                                                              lesser effect on the outstanding natural landscape of the Cardrona
                                                                                              Valley (as compared to the current zoning)
                                                                                       •      To ensure that development is contained and that a defined urban
                                                                                              edge is established in order to ensure against sprawl
                                                                                       •      To ensure a high quality mixed use and mixed density
                                                                                              development, which provides accommodation for residents,
                                                                                              visitors, and seasonal workers in an integrated manner
                                                                                       •      To require best practice urban design principles to be employed
                                                                                              throughout
                                                                                       •      To ensure that the MCS land and the existing village develop in a
                                                                                              complementary way, which enables a sustainable and integrated
                                                                                              community to establish within the valley
                                                                                       •      To provide for and encourage recreational opportunities within the
                                                                                              zone and in connection with other development areas in the vicinity
                                                                                       •      To enhance the ecological values of the Mount Cardrona site
                                                                                       •      To recognise and enhance the heritage values that exist within the
                                                                                              zone
                                                                                       •      To ensure that infrastructure is provided in an environmentally
                                                                                              acceptable manner and where practicable, is co-ordinated with the
                                                                                              existing Cardrona village.

                                                                    2.3               Scope
                                                                                      Our scope included:

                                                                                      • Providing a context for the site (in terms of physical characteristics
                                                                                        and location), or setting the scene for the primary demand analysis
                                                                                      • Investigating current demand - firstly within New Zealand, then to a
                                                                                        regional level (QLD) and then down to the specific Cardrona level.
                                                                                           Investigations included:
                                                                                           • Demographics

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                                                                                           • Tourism
                                                                                           • Demand Drivers, including:
                                                                                                     o   Detailed analysis of ski fields
                                                                                                     o   Development of an events calendar – and understanding the
                                                                                                         demand implications of these events
                                                                                                     o   Business
                                                                                              o Other
                                                                                           • Considering Cardrona’s point of difference
                                                                                           • Understanding the likely demand shift - research the potential
                                                                                             demand shift resulting from completion of the proposed
                                                                                             development and seek to find international comparisons of semi
                                                                                             “greenfield” developments developed in similar ski field locations
                                                                                             to determine the demand shift.
                                                                                      • Apart from a ski field focus as above, we also sought to research
                                                                                        other related demand that is “self generated” from a new settlement
                                                                                        of the type proposed.
                                                                                      • Finally, given the above, we considered the feasibility of
                                                                                        implementation of either the existing zone or the proposed plan
                                                                                        change.

                                                                    2.4               Critical Assumption
                                                                                      In forming our opinion as to the feasibility of the proposed
                                                                                      development, we have assumed the following:

                                                                                      • We are aware that Transit is unlikely to adopt the Crown Range
                                                                                        Road as a State Highway. Our report assumes that the Crown
                                                                                        Range Road will remain open to all forms of traffic, including buses,
                                                                                        coaches and shuttles, and continue to provide a quality of access at
                                                                                           least equivalent to that provided at present.

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                                                                    3                 Methodology
                                                                    3.1               Introduction
                                                                                      Our methodology involved a combination of primary and secondary
                                                                                      research, together with reliance on information and insights from within
                                                                                      CBRE, to provide a basis for forming an opinion as to the feasibility of
                                                                                      the proposed Cardrona development.

                                                                    3.2               Primary Research
                                                                                      CBRE visited Cardrona Valley and locations within the greater QLD and
                                                                                      conducted a number of interviews. Specifically, we met with:

                                                                                      • John Lee, previous owner of Cardrona Ski field and current
                                                                                        owner/operator of the Snow Farm
                                                                                      • Sam Lee, operator of the Cardrona Snow Park
                                                                                      • Shaun Gilbertson, previous (recent) manager of Cardrona Ski Field
                                                                                        and current manager of Southern Hemisphere Proving Ground
                                                                                      • Duncan Kennedy, CEO of Destination Queenstown
                                                                                      • Jenny Parker, as a representative of QLDC
                                                                                      • Duncan Smith, manager of Coronet Peak and Remarkables Ski
                                                                                        Fields
                                                                                      • Richard Hanson, part owner of Treble Cone Ski Field
                                                                                      • The manager of the Cardrona Hotel
                                                                                      We also conducted telephone interviews with:

                                                                                      • Andy Chapman, current manager of Cardrona Ski Field
                                                                                      • Chris Read, Manager of Queenstown Airport
                                                                                      • Debbie Thompson, owner of Back Country Saddles (Horse Trekking)
                                                                                      • Department of Conservation, Wanaka Office
                                                                                      • Wanaka Tourism
                                                                                      • Ben O’Malley, Millbrook Development Manager
                                                                                      • Warrick Kerr and Barry Robertson, Bayleys Real Estate
                                                                                      • Mark Simpson, Mac Property

                                                                                      The objective of these interviews was to gain an insight into the key
                                                                                      operational successes and challenges of businesses in the greater QLD,
                                                                                      with a focus on Cardrona.

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                                                                    3.3               Secondary Research
                                                                                      Details of the information sources include:

                                                                                       1. Information obtained from interviews with real estate agents,
                                                                                          tourism operators, QDLC and Destination Queenstown
                                                                                       2. Statistics New Zealand
                                                                                       3. Research reports completed by third parties, including:
                                                                                              a. Wanaka 2020
                                                                                              b. Property Economics
                                                                                       4. Urban Design Study, by R A Skidmore Urban Design Ltd. March
                                                                                          2006
                                                                                       5. Rural Visitor Zone – MCS, Yield Assessment, by R A Skidmore
                                                                                          Urban Design Ltd. October 2006
                                                                                       6. Vehicle movement information (Crown Range Road), provided by
                                                                                          QLDC. Sample counts in 2004, 2005 and 2006.
                                                                                       7. The Economic Significant of the Southern Lakes Ski Areas – 2005
                                                                                          Winter Season. New Zealand Tourism Research Institute.
                                                                                          December 2005.
                                                                                       8. Regional Visitor Monitor. Angus & Associates Ltd. April 2006.
                                                                                       9. Housing Affordability in Queenstown Lakes District. David Mead,
                                                                                          Hill Young Cooper and Tricia Austin, University of Auckland. June
                                                                                          2004.
                                                                                       10. New Zealand Regional Tourism Forecasts 2006-2012, Lake
                                                                                           Wanaka RTO & Queenstown RTO. Tourism Research Council.
                                                                                       11. Southland Visitor Statistics. Department of Conservation.
                                                                                           September 2005.
                                                                                       12. Snow Park Village. Snow Park NZ.
                                                                                       13. RPNZ Limited Property Database
                                                                                       14. Resort Evaluation Matrix, Ecosign Mountain Resort Planners, Ltd.
                                                                                           September 2006
                                                                                       15. Queenstown and Wanaka Growth Management Options Study
                                                                                       16. Queenstown Lakes District Council Long Term Community Council
                                                                                           Plan, Queenstown Lakes District Council
                                                                                       17. AMP / Massey University Home Affordability Report

                                                                                       18. QLDC Population Projections

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                                                                    4                 Background
                                                                    4.1               Location Analysis – Cardrona Valley, including the existing
                                                                                      Village and Study Area

                                                                    4.1.1             Overview
                                                                                      MCS has a spectacular mountain setting, en route between Queenstown
                                                                                      and Wanaka and close to a range of existing, predominantly winter
                                                                                      focussed, recreational activities.

                                                                                      The existing village at Cardrona comprises some 16 hectares of Rural
                                                                                      Visitor Zoned land. Existing development is focussed on the western
                                                                                      side of the road (and river), although previously there were two historic
                                                                                      villages on either side of the river.

                                                                                      Current uses (described from North to South) in the village include:
                                                                     Use                             Comments                                                         Zoning
                                                                     Recreation               Monster Trucks.                                                           RGZ
                                                                     Ski Access               Access to Cardrona Ski Field.                                             RGZ
                                                                     SUBJECT                  Access to subject development.
                                                                     Ski Access               Access to Snow Park, Snow Farm and Proving Ground. Buildings
                                                                                                                                                                        RGZ
                                                                                              associated with the Proving Grounds.
                                                                     Lodge                    Hot Toddy Lodge.                                                          RGZ
                                                                     Church                   Early character church.                                                   RGZ
                                                                     Rural / Lifestyle        Pringles subdivision. 12 lots of 8,000sqm to 8ha in size.
                                                                                                                                                                         RVZ
                                                                     development              Approximately half of the sites are built on.
                                                                     Accommodation            Four proposed owner occupier units.                                        RVZ
                                                                     Short Stay               Three accommodation units, apparently with approval for three further
                                                                                                                                                                         RVZ
                                                                     Accommodation            units.
                                                                     Land for development 4,900 sqms of development land currently for sale. Zoned Rural Visitor
                                                                                                                                                                         RVZ
                                                                                              Zone.
                                                                     Hotel and                Cardrona Hotel with restaurant and 16 hotel style units. Significant
                                                                                                                                                                         RVZ
                                                                     Accommodation            Brand Value for location.
                                                                     Short Stay               Benbrae development. 90 units planned, some completed and sold
                                                                     Accommodation            and some under construction. One, two and three bed configuration.         RVZ
                                                                                              Mostly sold. Potentially a restaurant and bar to be developed.
                                                                     Land for development Two vacant development sites (approx. 4,350 and 4,700 sqms)
                                                                                                                                                                         RVZ
                                                                                              currently for sale. Zoned Rural Visitor Zone.
                                                                     Accommodation            Established residences, together with some flood prone land that is
                                                                                                                                                                        RGZ
                                                                                              currently being filled and may have further development potential.
                                                                     Accommodation            Cardrona Valley townhouses. Under development. Potentially eight
                                                                                                                                                                        RGZ
                                                                                              units (duplexes).
                                                                     Rural / Res. subdivision Proposed subdivision of 6 sites, together with additional development
                                                                                                                                                                        RGZ
                                                                                              land.
                                                                     Horse Trekking           Commercial horse trekking business operated from a small farmlet.         RGZ
                                                                    RGZ – Rural General Zone, RVZ – Rural Visitor Zone

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                                                                    4.1.2             Proximity to Other Settlements
                                                                                        Proximity to nearby villages
                                                                                        Village          Travel Distance    Travel time       Travel Distance
                                                                                                               (kms)          (mins)        from Queenstown
                                                                                                                                                   (kms)

                                                                                        Wanaka                    25           15-20               69
                                                                                        Arrowtown                 32           25-35               20
                                                                                        Queenstown                44           40-55               0
                                                                                        Cromwell                  68            60                 60

                                                                    4.1.3             Proximity to Infrastructure
                                                                                      The proximity of Cardrona to key infrastructure and facilities is
                                                                                      summarised as follows:
                                                                                         Proximity to infrastructure and facilities
                                                                                         Facility                                Travel
                                                                                                                           Distance (kms)

                                                                                         Airports
                                                                                             Wanaka Airport                     29
                                                                                             Queenstown Airport                 39
                                                                                         Ski Facilities (to ski carpark)
                                                                                             Cardrona Ski Field                 14
                                                                                             Snow Farm/Park                     14
                                                                                             Treble Cone Ski Field              53
                                                                                             Coronet Ski Fieled                 51
                                                                                             Remarkables Ski Field              55
                                                                                         Walkways
                                                                                            Roaring Meg                         0.5
                                                                                            Cardrona River (potential)          0.5
                                                                                         Golf Courses
                                                                                            Millbrook                           35
                                                                                            Kelvin Heights                      46
                                                                                            Wanaka Golf Club                    24
                                                                                         Lakes / Boating
                                                                                            Lake Wanaka                         24
                                                                                            Lake Hayes                          33
                                                                                         Wanaka Library                         23
                                                                                         Schools
                                                                                            Primary                             24
                                                                                            Secondary                           26
                                                                                         Queenstown Events Centre               38
                                                                                         Wanaka Events Centre                   24
                                                                                         Conference Facilities
                                                                                            Wanaka                              20
                                                                                            Queenstown                          39
                                                                                         Commercial Facilities / Services
                                                                                           Wanaka                               25
                                                                                           Queenstown                           44

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                                                                    4.1.4             Roading Connections
                                                                                      The Crown Range Road/Cardrona Valley Road creates the main axis
                                                                                      through the valley and the main focus for existing and proposed
                                                                                      development. We note:

                                                                                      • Being a main traffic route, Cardrona Range Road effectively
                                                                                        operates as a through road
                                                                                      • The existing roading/parking layout in the existing Cardrona Village
                                                                                        is not particularly well suited for passing vehicles wanting to stop and
                                                                                        use local facilities
                                                                                      • Typical vehicle movements per week in both directions range
                                                                                        between 9,000 and 12,000. Interestingly, vehicle movements
                                                                                        appear to be broadly consistent through winter and summer months.

                                                                                      The other key roads in the area include the main access road to
                                                                                      Cardrona Ski Field which is located some two kilometres to the north of
                                                                                      the existing village and alongside MCS RVZ, while the access road to
                                                                                      the Snow Farm, Snow Park and the Proving Grounds is immediately
                                                                                      opposite.

                                                                    4.2               Site Analysis – Study Area

                                                                    4.2.1             Site Attributes
                                                                                      Mt Cardrona Station is a large land holding. The study area including
                                                                                      the existing RVZ:

                                                                                      • Has well formed access off the Crown Range Road, almost opposite
                                                                                        the entry to the Snow Farm and Snow Park access road
                                                                                      • Generally rises moderately some 30 – 40 metres above the Crown
                                                                                        Range Road to a large naturally terraced area that rises some 70 -
                                                                                        80 metres over a distance of some two kilometres, to the foot of
                                                                                        Mount Cardrona
                                                                                      • Has an easterly aspect, overlooking the Cardrona Valley and toward
                                                                                        Mount Pisa
                                                                                      • Enjoys early morning sun and is sufficiently to the east of Mount
                                                                                        Cardrona so that it does not lose the sun in the afternoon in winter
                                                                                        until approximately 3:00 – 4:00pm
                                                                                      • Is approximately two kilometres north of the existing Cardrona
                                                                                        Village (Cardrona Hotel), being a walkable distance

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                                                                                      The following photographs illustrate the site and surrounds:

                                                                                      Cardrona Valley, western view

                                                                                      Mount Cardrona Station

                                                                                      Mount Cardrona Station, plateau.

                                                                    4.2.2             Resource Management Overview
                                                                                      Approximately 16.2 hectares of land (some 15 ha of which is owned by
                                                                                      MCS) on the subject site is zoned Rural Visitor Zone, being a zone that
                                                                                      enables relatively flexible development including visitor accommodation
                                                                                      to a relatively high density. The Rural Visitor zoned land is currently
                                                                                      located close to the Cardrona Valley Road and is some two kilometres
                                                                                      to the north of the existing Cardrona Village (also Rural Visitor Zoned
                                                                                      land).

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                                                                                      As part of a strategic planning exercise for the entire District, in
                                                                                      December 2003 the QLDC co-ordinated a workshop with local
                                                                                      residents of Cardrona to set out a community vision, strategic goals and
                                                                                      priorities for the next 10 to 20 years for the Cardrona community. The
                                                                                      resulting “Cardrona Community Plan” was endorsed by the Council
                                                                                      and provided key community outcomes for Cardrona Valley.

                                                                                      This plan recommended shifting the location of the Rural Visitor Zone
                                                                                      located on MCS on to the terrace above Cardrona Valley Road and
                                                                                      identified the need to create a linkage between the two Rural Visitor
                                                                                      Zoned locations.

                                                                                      The current owners of MCS were approached by QLDC to initiate a
                                                                                      Plan Change to relocate the boundaries of the Rural Visitor Zoned land
                                                                                      on MCS and improve the basis of the zone to ensure an appropriate
                                                                                      mix of uses, incorporating permanent residential housing, visitor
                                                                                      accommodation, worker housing and ancillary small scale commercial
                                                                                      amenities.

                                                                    4.3               Population Profile
                                                                                      The following table presents a high level analysis of the surrounding
                                                                                      population profile. Please note that the population estimates
                                                                                      summarised in this section (based on Statistics New Zealand figures)
                                                                                      relate to a catchment area that is slightly larger than the catchment area
                                                                                      used for the dedicated QLDC population numbers. A detailed analysis
                                                                                      can be found in Section Six of this report.

                                                                                                                  Population
                                                                                                                     2001       Ave. HH Income
                                                                                                     Cardrona         66             $29,809
                                                                                                     Wanaka         3,750            $49,604
                                                                                                     Queenstown     11,949           $58,149
                                                                                                                   Source: Statistics New Zealand

                                                                                      • The 2001 census reported 66 usual residents in Cardrona Valley.
                                                                                        Reflecting the rural and mountainous nature of the valley, the
                                                                                        average household income is low; close to $30,000 pa. The
                                                                                        greenfields nature of the existing Cardrona Valley makes it difficult
                                                                                        to forecast population with any confidence.
                                                                                      • In contrast, the wider Wanaka region is forecast to have around
                                                                                        5,200 people by 2006, representing a 39% increase over the 2001
                                                                                        census. The average household income for this area was just under
                                                                                        $50,000 pa.
                                                                                      • Queenstown had a 2001 usually resident population of around
                                                                                        12,000 people. Over the five years to 2006 this is forecast to

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                                                                                           increase to 13,000, representing 9% growth over the period. The
                                                                                           average household income is the highest amongst our comparables
                                                                                           at just over $58,000 pa.

                                                                    4.4               Key Findings
                                                                                      • Cardrona is located in a spectacular mountain environment with
                                                                                        excellent proximity to a range of winter activities.
                                                                                      • It is en route between two larger and established townships,
                                                                                        Queenstown and Wanaka.
                                                                                      • The current usually resident population of Cardrona is 66. As at the
                                                                                        date of this report there are approximately 100 to 105 units
                                                                                        (including owner occupier units, hotel rooms and short stay
                                                                                        accommodation units), with further units currently under
                                                                                        construction.
                                                                                      • At present the amount of development in Cardrona is limited and, as
                                                                                        such, the village relies heavily on the surrounding winter activity, with
                                                                                        comparatively limited existing summer attractions. The lack of
                                                                                        development at Cardrona also means that any skiers or workers in
                                                                                        the valley predominantly travel from Wanaka and Queenstown.
                                                                                      • Nevertheless, within a 20 – 55 minute drive, there are a wide range
                                                                                        of summer and further winter activities as well as commercial and
                                                                                        township amenities.
                                                                                      • The site provides excellent opportunities for the development of a
                                                                                        mixed use zone.
                                                                                      • The current Cardrona Village is located on a busy through road with
                                                                                        development focused on the western side.
                                                                                      • The greenfields nature of the existing village and the lack of
                                                                                        development makes it difficult to forecast population growth with any
                                                                                        confidence.
                                                                                      • The average household income of the existing Cardrona Valley
                                                                                           population is materially below both Wanaka and Queenstown.

                                                                    RESEARCH & CONSULTING

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                                                                    5                 Development Potential and Site Capacity
                                                                    5.1               Overview
                                                                                      The study area (which comprises the existing MCS Rural Visitor Zone
                                                                                      and the area proposed for the new zone under a proposed plan
                                                                                      change) is a substantial land holding located at the base of Cardrona
                                                                                      Ski field and with frontage to Cardrona Valley Road.

                                                                                      The following plan illustrates the Study Area (provided August 2006):

                                                                                      The primary difference between the implementation of a plan change
                                                                                      and that that would be permitted under the existing zone, is that under
                                                                                      the existing zone, development would have been clustered in a smaller
                                                                                      area closer to the ski access road; an area with largely inferior
                                                                                      topography and slightly further from existing development in Cardrona.

                                                                                      The current proposal encapsulated by the plan change utilises the
                                                                                      elevated terraced area of the site with better connection to the existing
                                                                                      village. It is less visible from the Crown Range Road than development
                                                                                      that would occur in the RVZ.

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                                                                    5.2               Site Capacity / Building Typology
                                                                                      R.A. Skidmore Urban Design Limited have undertaken a yield
                                                                                      assessment report for the existing zone and plan change are which
                                                                                      estimates that the plan change would provide a mix of low to high
                                                                                      density development and would provide capacity for around 1,000
                                                                                      units.

                                                                                      The following table provides a comparison of the existing Cardrona
                                                                                      Village, the existing use rights and proposal at MCS.

                                                                                                                          Cardrona                      Mt Cardrona Station
                                                                                        Type                               Village                  Existing Zone        Plan Change
                                                                                                                                              Scenario 1       Scenario 2
                                                                                        Visitor Accommodation                  -                 372             1,259             595*
                                                                                        Residential                            -                 452              213              374
                                                                                        Total                                574†                824             1,472             969
                                                                                       * includes high density residential
                                                                                       † Additional development capacity - may be over stated due to the inclusion of potential development on
                                                                                       a floodplain
                                                                                       Source: RA Skidmore Urban Design Ltd

                                                                                      Based on the existing zone provisions, it is estimated that the existing
                                                                                      Cardrona Village has additional capacity of around 574 units. It is
                                                                                      noted that this capacity relates to a village with limited infrastructure in
                                                                                      terms of services such as sewage disposal, a lack of integration of uses,
                                                                                      somewhat fragmented development to date, roading issues with a
                                                                                      major arterial route bisecting the development and flood plain areas,
                                                                                      particularly off the eastern side of the Crown Range Road.

                                                                                      To put the potential development of the existing zone at MCS into
                                                                                      perspective:

                                                                                      • The Jacks Point development is expected to provide approximately
                                                                                        650 residential units in the short term, provided by way of primarily
                                                                                        low density development, however, the overall development is likely
                                                                                        to provide a total capacity of 2,375 units with one dwelling per 1.9
                                                                                        hectares.
                                                                                      • The Kawarau Falls development is likely to provide some 1,100 units
                                                                                        within 15 precincts with a very strong focus on tourism
                                                                                        accommodation and with development generally to a high density.
                                                                                        The total land area is 4 hectares.
                                                                                      • The Peninsula Bay development in Wanaka provides for
                                                                                        approximately 400 low density residential lots at a density of one
                                                                                        unit per 5.3 hectares.
                                                                                      • The Remarkables Park Zone for integrated development with the
                                                                                        potential to accommodate 1,800 units.

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                                                                                      • The Benbrae development will on completion provide 90 visitor
                                                                                        accommodation units; 40 are already complete and sold and 27are
                                                                                        sold subject to completion. This development reflects a density of
                                                                                        157 units per ha.

                                                                    5.3               Key Points
                                                                                      • The yield from the existing zone is between 824 and 1,400 units.
                                                                                      • The plan change proposes approximately 1,000 units.
                                                                                      • The existing village currently provides some 100 to 105 units (as at
                                                                                        the date of this report) with potential for a further approximate 574
                                                                                        units.

                                                                    RESEARCH & CONSULTING

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                                                                    6                 Residential Analysis
                                                                    6.1               Overview
                                                                                      This section provides an overview of the population profile using the
                                                                                      2001 and 2006 census, the forecast resident population by QLDC (out
                                                                                      to 2026), a high level analysis of affordability issues, the proportion of
                                                                                      absentee owner sales (domestic and international), as well as
                                                                                      Cardrona’s future property supply. The section concludes with the
                                                                                      potential demand from residents.

                                                                    6.2               Catchment Methodology
                                                                                      In order to profile the population living in and around Cardrona, it is
                                                                                      necessary to define geographic regions.

                                                                                      A number of factors determine a locality catchment area.             These
                                                                                      include:

                                                                                      • The site attributes and building typology
                                                                                      • The accessibility of the site through the roading network
                                                                                      • Geographical constraints that act as barriers
                                                                                      • The network of competitive facilities.

                                                                                      Section 4 of this report provides an overview of the material site
                                                                                      attributes including its easterly aspect, distance from the existing
                                                                                      Cardrona Village and surrounding ski fields and facilities, the site’s
                                                                                      proximity to other settlements and key infrastructure and facilities as well
                                                                                      as providing an outline of the roading infrastructure.

                                                                                      Earlier in this report, we have provided an overview of development
                                                                                      potential and site capacity within MCS.

                                                                                      There are geographical constraints to the site’s catchment area from the
                                                                                      surrounding mountainous terrain. This results in areas of very little or
                                                                                      no population over significant tracts of land within what otherwise
                                                                                      would serve as Cardrona’s potential catchment area.

                                                                                      Another factor influencing the shape and extent of the chosen
                                                                                      catchment areas is the boundaries of the spatial units on which the
                                                                                      census population data is based. Area Units are the most convenient
                                                                                      spatial statistics unit for the analysis of the various catchments’
                                                                                      demographic characteristics as they are the smallest statistical units for
                                                                                      which Statistics NZ produces population forecasts. However, in the case
                                                                                      of Cardrona, the sparseness of the population outside the main urban
                                                                                      areas means that Area Units are too large to provide a suitable basis
                                                                                      for our analysis. Therefore, we used the smallest units for which Census

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                                                                                      Demographic and Socio Economic data is available. These units are
                                                                                      called Meshblocks. The catchment area boundaries reflect meshblock
                                                                                      boundaries, which in some cases distorts the shape of the catchment
                                                                                      area. This, in our opinion, does not have a material impact on the
                                                                                      study.

                                                                                      For the purpose of profiling various catchments, we have provided three
                                                                                      catchments within the wider Cardrona locality:

                                                                                       •      Cardrona - Encompassing MCS and the Cardrona Valley from
                                                                                              approximately the base of the Crown Range, north to the outskirts
                                                                                              of Wanaka
                                                                                       •      Wanaka – Including both the urban and rural outskirts of the
                                                                                              Wanaka Township. It extends east to include the townships of
                                                                                              Luggate and Albert Town
                                                                                       •      Queenstown - Including the core Queenstown and Frankton
                                                                                              townships and their growing periphery. In addition it includes
                                                                                              Arrowtown and Lake Hayes.

                                                                                      The following map provides an outline of the various catchments used in
                                                                                      the preceding and forthcoming population profile.

                                                                    6.3               Population Analysis
                                                                                      This section primarily deals with the historic population levels of the
                                                                                      catchment areas as well as the key socio economic characteristics of this
                                                                                      population. The basis of the information is Statistics New Zealand’s
                                                                                      (SNZ) 2001 Census. We then use SNZ census 2006 provisional results
                                                                                      to analyse the potential growth in the market from 2001 to 2006.

                                                                    RESEARCH & CONSULTING

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