As our industry picks itself up from the chaos caused by the Canterbury earthquakes and the global financial crisis, I am cautiously optimistic that this year will see positive growth, although some major challenges lie ahead. The greatest of these challenges is the issue of the need for strengthening buildings as a result of the Christchurch tragedy, which plainly demonstrated the fact that buildings need to be strengthened to save lives.

Once the Royal Commission completes its inquiry into building failures in the Canterbury earthquakes, our industry will have a better understanding of what is required to improve the structural integrity of buildings. The demand for earthquake strengthening from owners, occupiers and insurers will increase exponentially, but at what cost to owners, investors and tenants? The challenge for our nation will be to determine whether or not we can afford the price for all of the remedial work required, or whether we can prioritise according to risk.

Property Council has already begun research into the scale of properties that may need to be strengthened in order to prepare our industry for the Government’s decision, expected later this year. Initial research shows the problem will affect building stock worth billions of dollars collectively. Indeed, the number may be so huge it makes the leaky homes debacle appear insignificant in comparison. Our industry will need support to address any strengthening requirements in a timely manner.

Probably the easiest way to achieve this would be for the Government to remove the current financial disincentive to strengthening. At the very least, reinforcement requirements need to be tax deductible. The harsh reality is that if owners receive a bill for strengthening that costs more than the net worth of the building, the property will no longer be financially viable. Commercial property is the infrastructure of business.

Any unexpected imposition of costs will have a serious impact on our nation’s economy and in particular our ability to perform in a tough international environment. Increased costs will also reduce the capacity for small, medium and large enterprises to be based in New Zealand. The issue of earthquake strengthening is a big one for the property industry as we focus on growth, but it’s certainly not the only one we are facing.

Property Council has just released its new policy manifesto, Fast-Forward to Growth, which is designed to be a blueprint for economic transformation. In the manifesto we call for the alignment of local and national infrastructure plans as a key growth accelerant. We firmly believe that if the commercial property industry is to experience solid growth this year, the building blocks for that growth need to be in place. Most crucially, an agreed and aligned strategy between central and local government is essential, and central government needs to lead the charge.

Christchurch is a city where this alignment can most readily be achieved, and essential infrastructure must be restored before the city can be expected to pick itself up and rebuild. While rebuilding Christchurch will no doubt stimulate growth, one of the other big challenges for the commercial property sector is that as long as the region is still experiencing earthquakes, many affected owners and investors will continue to put construction plans on hold.

On the positive side, I am confident that the Government is already seriously aware of the challenges facing our industry and their potential to impede economic recovery if not handled correctly. Hon Steven Joyce, Minister for Economic Development, recently spoke to Property Council members and assured them that the Government is hugely aware of the issues. Nonetheless, it was pleasing to hear the Minister has “cautious optimism” for the economic outlook this year, and that even though he doesn’t expect there to be a huge boom in 2012, he does believe the construction industry will pick up.

We are expecting Mr Joyce to continue to drive growth in New Zealand when he becomes Minister in charge of the newly established Ministry of Business, Innovation and Employment from 1 July, and we will follow the progress of the new Ministry with great interest.

In the meantime the commercial property sector must get on with the business of development, and the Property Council as the representative of this sector will continue to focus on breaking down the barriers to growth that we are facing, so that our industry can play our part in helping the country boost its economic worth.