Real-estate spree over, says Mr Muldoon

Press, 15 June 1978, Page 3

Real-estate spree over, says Mr Muldoon

The Prime Minister (Mr Muldoon) yesterday criticised the waste of effort in “shuffling around existing real estate at ever-increasing prices,” when talents should have been devoted to expanding efficient industries, especially those with export potential. Mr Muldoon was speaking at the official opening of the S2M Kent House, which accommodates the new studios and offices for Radio New Zealand. The four-storey building, situated at the comer of Durham and Chester Streets, w?.s designed by Warren and Mahoney and built by Williams Construction (Canterbury), Ltd. Mr Muldoon said that the relative profitability of realestate ir.estment, compared with manufacturing and farming, had been distorted by an inflation which had accompanied the rapid economic growth from 1970 to 1976.

Controls on interest rates had made it possible for people to borrow money at a cost below the anticipated rate of inflation and then invest it in assets where the expected inflation was highest. Expansion in the service sector had also created demands for office space with little apparent benefit to the community at large, said Mr Muldoon. “Fortunately, this spree has come to an end and, in Auckland particularly, there is a glut of high-rise office space,” he said. A major cause of inflation in all developed economies had been the growth in rents of assets which could nut be easily reproduced, for example, real estate surrounding cities, Mr Muldoon said. “The failure of most governments to control these asset prices had had serious social and political con-

sequences around the world,” he said. The present stabilisation of real-estate prices, if maintained, would restore a better relationship between incomes and asset prices. It would tilt the balance of advantages back to investment in productive assets, rather than conspicuous and wasteful investment in unneeded real estate. Mr Muldoon said the country needed more of the good spirit indicated in the construction firm’s work force. He referred to the speed with which Williams Construction completed Kent House. Construction had taken 12 months, from May 1977, to May, 1978. ‘‘This was a great effort b> all concerned,” said Mr Muldoon. “It may reflect the times, a recognition that delays cost the boss money whic’ can turn profit into a loss, and may cause him to

think twice about further ventures.” Radio New Zealand will occupy three floors of the building under a 25-year lease from Williams Development Holdings. Broadcasting from Kent House is planned to begin by early September. The structural strength of Kent House is 30 per cent greater than conventional office buildings, in order to meet its civil-defence role as a communications centre in times of emergency. The company intends to build five or six buildings on the same site, which is bounded by Durham, Chester, and Kilmore Streets. They will also be designed by Warren and Mahoney. Mr Muldoon commended the trend towards an architectural blending of commercial and other buildings in the area as a reflection of a ‘‘growing recognition or community spirit.”