Green shoots - local winners and losers post Covid-19

Analysis.

The Covid-19 situation is developing so fast that the end, or the beginning of the end, could arrive just as quickly as the start. In China, the city where all of this started, Wuhan, is already starting to relax their strict quarantine rules.

Our crystal ball is likely to be less than crystal clear for a while.

But, and it’s a big but, the secondary and tertiary consequences of the virus will last way beyond the disease itself. That said, we can start to predict what may happen in our region – both socially and economically.

It’s a very hazy crystal ball but the exercise is worth doing as we all will need to adapt to a very different world.

Let’s start with the positive – areas where existing skills and resources can be used to rebuild our local economy.

• Technology and remote working. Obvious really, but anything that scales without the need to ship physical goods and helps people work without physical travel will be successful in the post Covid-19 world. Government grants may help as well.
• Construction. Council money that was destined for new tourism and growth-related infrastructure could be redirected to other projects. A new convention centre would be a great idea as the world will need secure and virus free venues post Covid-19. Convention travel will build much more quickly than “regular” tourism. A university, film school, arts college, worker accommodation and a tech hub could all be great projects to create jobs and new domestic residents. Our population will drop with the inevitable departure of many migrant workers who will no longer have low paid, unskilled work in the hospitality and tourism sectors.
• House building. The banks and the Government will need to protect jobs, and house building could employ a lot of people. We have a housing shortage and will want to keep people in the region. Expect house prices and building prices to become more affordable – maybe even with GST relief on building costs. That would bring house prices down by a further 15%. Our housing crisis could be solved in a year or two – but some existing homeowners with big mortgages will end up under water and unable to move. Banks and Government will help keep these people from losing their homes.
• Medical, recreation, mental health and well-being. Covid-19 will take a big toll on people’s resilience and sense of security. There will be many more job opportunities in rebuilding our sense of national health. Government will (finally) put more money into public health and there will be proper accommodation supplements for workers in the Southern Lakes and Cromwell – unless the cost of living drops naturally which it well might. Health will become the new tourism.We wil get a new hospital and a new SDHB. Midwives and maternity care wil get the respect and resources they always needed.
  
• Local food – growing and distribution. The first evidence of a new circular economy could be in a large number of small-scale local food operations. We will want to buy local to support our fellow residents – and trucking or flying food from Christchurch and beyond will not fit with a post Covid-19 world where fossil fuel use will start to disappear, and climate change will be taken much more seriously.
• Media will change and advertising revenue will drop away dramatically. New models will emerge, but newspapers may disappear more quickly given their dependence on physical production and transportation, as well as a drop in ad revenue. The need for better connections and communication will increase in a post Covid-19 world. The news agenda will probably switch from adversarial politics and car crashes to more social and strategic issues.

 On the negative side of the balance sheet, these sectors will be likely to struggle in a post Covid-19 world.

• Tourism. Obviously. International visitors will probably never come back in their previous numbers. Airlines will go bust, people will be struggling financially, and international travel will (once again) become something preserved for the rich and the essential. The lingering worry over disease will last for decades – there may well be other pandemics just around the corner. Domestic tourists may come to our district for arts courses, painting lessons, health retreats, walking tours – but probably not to jump off bridges or out of planes. The good news is that domestic visitors will stay for a couple of weeks, probably in mid to upmarket private accommodation and not in big hotels. Big hotels could be converted for a new use such as arts centres, tech hubs and even worker accommodation
• Hospitality. People will still want to go out to eat and drink but not as much as before. Queenstown may go from 150 bars and restaurants to just 20 or 30. Wanaka, Cromwell and Bannockburn will all be locations for very successful niche restaurants serving local produce – maybe even grown at the premises.
• Local Government. There will be far more scrutiny of local government spending and management. Local rates will stop rising and actually come down. We will not need new roads or shopping malls. The focus will shift to electric buses and bikes. The consultant gravy train will grind to a halt. The masterplans, district plans and x,y z plans will all need to be set aside and replaced by something much simpler that the whole community will have input on. Expect some staff cuts and management changes – as well as some leadership changes.
• Air travel. No longer a growth area. Queenstown airport will pivot back to be a community facility like it always should have been. Wanaka will stay as a general aviation airport with some turbo prop regional services to Christchurch.
• Rental vehicles. 90% of companies and capacity will probably disappear.
• Real Estate. Not a good market to be in. 60% - 80% of real estate agents will probably need to find a new way to earn money. House price inflation may effectively disappear with housing seen as a necessity not an investment. New rent and price controls may further control future house price inflation.
• Lawyers. After an initial flurry of activity relating to cancelled contracts and personal crises, there will be more stability and less “investment” business – less work for lawyers.
• Airbnb and rental properties – there will be a good future for property owners wanting to embrace new, sustainable tourism and even run educational, health/lifestyle courses for domestic travellers. The lower quality types of accommodation will need to be better regulated as the Boom times are replaced by something new. Some very low-quality houses, converted to mass accommodation and with safety/crowding issues, currently ignored by QLDC, will need to be shut down – even demolished.

So that’s our high-level forecast. Food for thought hopefully. It’s not too early to start thinking and planning.