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01-06-2011

Otago oil boom ahead

Landlords.co.nz

Oil exploration is making Dunedin hot property for investors, reports Carmen Houlahan.

Dunedin Property Investors could expect house values to increase in the long term if the Dunedin City Council's attempts to entice oil companies to the region work out, Otago Property Investors were told at their annual meeting.

Dr James Henry, the keynote speaker at the meeting, has been part of a Dunedin City lead team to attract oil companies to the city.

Dr Henry told members the city had already done a lot work to encourage oil companies to the city, including making a promotional DVD that had been sent to major industry players.

In the DVD narrated by Dunedin mayor Dave Cull the city is promoted as an "ideal facility for a logistic base".

It says there is 20ha of land surrounding the Dunedin harbour available now where companies could set up their exploration businesses.

"The city council is 100 per cent supportive. We understand your requirements and are confident we can meet them." The council has included a computer-generated model of how the city could cater for all the needs of an oil industry in any future development.

Dr Henry predicts Dunedin could see the economic benefits similar to those Taranaki has experienced, with increased demand on property and low unemployment.

In Taranaki about 820 people are directly employed in the oil and gas industry. These were all people who needed accommodation.

The money the oil companies spend is huge. Oil companies have already started spending in Dunedin. For example, to refuel their vessel with diesel costs $300,000, Dr Henry said.

He also compared theScottish examples of Aberdeen and Dundee. Aberdeen had welcomed the companies with open arms, while Dundee - which had had the same opportunity - had turned it down.

Now, Dundee is depressed while Aberdeen is experiencing an economic boom. House prices have increased, University numbers are up, and unemployment is low.

More than 100,000 aircraft movements now come through the Aberdeen airport, due in part to the oil industry, and it also has 17,000 vessel movements -- three times more than Dunedin, Dr Henry said.

It was likely exploration drilling will start off the Otago coast soon.

"Tenders have gone out and they are waiting for the tender documents to come back in," Dr Henry said.

Things were well down the track, as oil companies had already been in Dunedin visiting engineering firms, and other facilities. In the long term if a development went ahead then any staff would need housing so this had to create a demand.

Source: Landlords.co.nz

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