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Infrastructure Delays Create Market Opportunities

John Ross, Marketing
John Ross
04 July 2025

Major infrastructure delays across the South Island continue to reshape property investment strategies, creating both challenges and unexpected opportunities for astute investors. The ripple effects of project postponements extend far beyond construction sites, influencing accommodation demand, investor decisions, and ultimately creating acquisition opportunities for those positioned to act.

Alva2

Christchurch has seen many major setbacks to The Christchurch Central Recovery Plan projects, such as Taiwhanga Rehia Metro Sports Facility. The centre's costs have increased, with the $317 million budget for the major rebuild project now $365 million. Along with The Christchurch Cathedral fourteen years on from the quakes, as the cost to rebuild the Cathedral has ballooned to $219 million, leaving an $85m gap in funding, the reinstatement project is at a stalemate.

Further south, the Dunedin Hospital rebuild exemplifies this dynamic perfectly.

Construction Progress and Timeline

The new Dunedin Hospital project is a major undertaking, and construction is happening in two main phases: the Outpatient Building and the Inpatient Building.

Outpatient Building: This building is expected to be completed and operational in late 2026. The exterior is nearly finished, and internal fit-out work is underway.

Inpatient Building: This is the larger of the two buildings and will house the emergency department, operating theatres, and inpatient wards. After some delays, work on this building is resuming. The timeline for the Inpatient Building is as follows:

  • Mid-2025: Capping of the 324 piles on the site will begin.
  • 2026-2031: Main construction.
  • 2031: The Inpatient Building is expected to be operational.
    Recently, contractors have been seen moving equipment onto the site of the Inpatient Building, and a contract for its construction is expected to be signed shortly.

Project Leadership and Budget

Evan Davies Appointed as Crown Manager: To get the project back on track, the government has appointed Evan Davies as a Crown manager to oversee the delivery of the Inpatient Building. Davies has extensive experience in delivering large-scale infrastructure projects.

Budget: The total budget for the new Dunedin Hospital is $1.88 billion, making it one of the largest health infrastructure investments in New Zealand's history. The government has confirmed an additional $290 million for the project.

Hospital Capacity

The new hospital will have a total of 424 overnight beds, with some spaces for future fit-out. There has been some public discussion and concern about changes to the number of beds in certain departments compared to the original plans.

Strategic Repositioning Creates Rare Opportunity

Significant accommodation demand, with ongoing delays have forced property investors to reassess their strategies. For example, Alva House—a historic 25-bedroom boarding house generating nearly $240,000 gross annually—has now on the market as owner pivots from his original hospital worker accommodation plan.

The owner of Alva House, a Canterbury developer who successfully provided worker accommodation during Christchurch's earthquake rebuild, acquired the 1880s heritage property five years ago specifically for hospital construction workers. However, Alva House demonstrates successful adaptation. The property achieves full occupancy as a traditional boarding house, and Jeremy Kelleher of Kelleher Real Estate expects a gross yield of approximately 14% — far exceeding typical residential returns of 4-6% in Dunedin and the nationwide boarding house average of 7%. The decision to sell stems from a strategic life-stage transition rather than waiting. "We'll still come out well on the right side of the ledger," he confirms, with the sale creating an opportunity for new owners to acquire a proven, fully operational business.

Alva vs Traditional Market

Hospital Construction Provides Future Upside

While delays influenced the owners' timing of exit, the hospital project remains scheduled to resume construction. This creates an interesting proposition for incoming investors: acquire a property that's already generating strong returns. The property's proven ability to maintain full occupancy and strong cash flow demonstrates its resilience across different market conditions. New owners can benefit from established operations while positioning for potential increased demand as major infrastructure projects restart.

Market Timing Favours Buyers

Recent REINZ data supports the investment case, with Dunedin's median price stabilising at $600,000 after recovering from April's 3.2% year-on-year decline to show 5.3% growth in May. This stability, combined with subdued investor activity and realistic vendor expectations, creates favourable conditions for strategic acquisitions.

According to Kelleher, properties like Alva House offer exceptional value in the current market. "We're seeing realistic vendor expectations align with genuine buyer interest, creating opportunities for investors who are focused on established cash flow rather than speculative gains," Kelleher observes. "With less competition for quality properties, serious buyers have the chance to secure a significant asset like Alva House on very reasonable terms."

Infrastructure delays across the South Island are creating what seasoned investors recognise as generational opportunities. While projects stall, proven assets like Alva House come to market at compelling valuations, offering immediate cash flow and future upside potential.

The astute investor's advantage lies not in perfect timing, but in recognising when market disruption creates genuine value. In today's South Island market, that moment is now.

References
New movement on Dunedin hospital site | Otago Daily Times Online News 
Christchurch's Metro Sports Facility delayed again, $317m budget to increase - Chris Lynch Media
When will Christ Church Cathedral and Square be rebuilt? | RNZ News
New Dunedin Hospital - Outpatient Building - Infrastructure Pipeline
New Dunedin Hospital - Inpatient building - Infrastructure Pipeline
REINZ April 2025 Autumn Chill Hits Property Market
REINZ May 2025 Data Cautious Confidence Returns to the Property Market 

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