New Zealand


  • Service: Advisory, Corporate Finance, Infrastructure Financing
  • Type: Business and industry issue
  • Date: 31/07/2012

The Christchurch Recovery Plan 

Building a city of the future - Christchurch


The release of the Recovery Plan represents a great opportunity for Christchurch to develop as a world class city.


It provides welcome and much needed direction to the business community for the reinvigoration of the heart of the city.


Central City Recovery Plan


The earthquakes of the past two years, while traumatic for us all, have created an unprecedented opportunity for the city to dream, design, build and enjoy a different future.


The potential of that future has been outlined by Prime Minister, the Rt Hon John Key and the Minister for Canterbury Earthquake Recovery, the Hon Gerry Brownlee in detail over the last 24 hours.


The Recovery Plan provides us with a clear insight into the future of Christchurch and confidence that this process will drive the Canterbury economy for the next decade. It will create jobs and attract new investment, construction and tourism, which will drive economic growth in our region.


Christchurch is New Zealand’s second largest city and the gateway to the South Island. New Zealand needs Canterbury and Christchurch to be a prosperous and productive cornerstone of its economic growth strategy and the unveiling of the central city recovery plan provides confidence in that future prosperity.


Among the 12 identified ‘anchor’ projects are:


  • Convention Centre Precinct
  • Health Precinct
  • Metro sports facility
  • Performing Arts precinct
  • Justice and Emergency Services Precinct
  • The Frame


The development and catalyst of these projects will ensure significant employment and construction expenditure in the CBD over the next decade. At the same time, they will deliver long-lasting, world-class assets which will enhance lifestyles and contribute significantly to our future economy.


Although the Recovery Plan provides an excellent framework for the recovery of the city and the investment required to deliver on the reconstruction of the city, it does not answer all of the questions.Quite reasonably, many of the details regarding process, investment and timing are still being worked through.


KPMG in Christchurch will be accessing national and global intelligence and working directly with relevant parties to gain a comprehensive understanding of the various issues and opportunities the Canterbury business community will face as this blueprint is breathed into life.


You can expect to receive further information from us as we deepen our understanding of the future Christchurch challenges and opportunities.


In the meantime, we highlight below some our initial thoughts regarding the Recovery Plan:

Compulsory land acquisition

The Recovery Plan will require the compulsory acquisition of up to 840 inner city properties. This process will allow the establishment of The Frame for the city and progress on several of the anchor projects.


Property owners impacted by compulsory acquisition should be taking professional advice on:


  • the value of their property
  • the negotiation process
  • Tax implications on settlement proceeds
  • opportunities to negotiate in relation to other investment opportunities in the City
  • reinvestment of capital. 


The process for the compulsory acquisition of property will become clearer as CERA engages with individual property owners. In the meantime, those property owners should be preparing to successfully negotiate a transaction that positions them positively for the future.

Small-to-medium size enterprises (SMEs)


This process will not just be about large corporates and government investment. The city centre will require investment and participation by a wide range of small to medium sized enterprises.


Retailers, accommodation providers, restaurateurs and hospitality suppliers should all be reviewing their current position against the opportunities that will be afforded in the revitalized central city.


SMEs should be actively preparing their three-to-five year business plans, in order to be well prepared for opportunities to take up space in the precincts as they are developed. These plans should allow them to optimise their returns over that period but which also provide flexibility and longer-term value through participation in the central city rebuild process.
Tax issues


Tax will be an issue, particularly for those taxpayers dealing with Government negotiations regarding compulsory property acquisition.


In particular, from a tax perspective it is necessary to consider if an acquisition would result in:


  • a tax liability arising from a claw back of depreciation previously claimed (depreciation recovery income), or
  • a tax liability or loss arising from a gain/loss on the sale of land and/or buildings.


In respect of the former, as the law stands, the rollover relief provisions (for depreciation recovery income) implemented as part of the post-earthquake tax relief programme will not apply to the payouts from compulsory land acquisition. It is our view that the same relief should apply to landowners affected in this regard and we are discussing this point with Inland Revenue.


It is a case by case basis as to whether gains arising from the sale of land would be taxable. A similar position arises for deducting losses. It is important that affected landowners take the appropriate advice now to manage their tax affairs efficiently. 


From previous experience, following the earthquakes, we note that Inland Revenue has been very willing to listen to issues as they arise and adjust tax law as appropriate where agreed inequitable positions arise. We recommend discuss your position with your advisor, establish the potential tax impact for you and decide on an appropriate course of action.



The release of the Recovery Plan represents an opportunity for Christchurch to develop as a world class city. It is a bold plan, which will require bold actions to implement. The time is now to start planning for how it will affect you and your business. Talk to us now about the impacts and opportunities for you.


Christchurch recovery series

Feature image
The earthquakes have impacted all Christchurch businesses in some way. KPMG can help in the recovery.

Rebuilding a 21st century city

Christchurch rebuild
The Christchurch infrastructure challenge. We have a unique opportunity to plan and rebuild NZ’s second largest city.