Since the 1980s, Copenhagen has transformed from a listless industrial centre with 17.5% unemployment, an aging population and annual budget deficits to now claiming to be the happiest city in the world, is on track to be the first carbon neutral capital, and generates annual GDP of US$105 billion.
This transformation has been achieved by unlocking the previously untapped financial potential within the city’s port and other property assets.
A recently released report ‘The Copenhagen City and Port Development Corporation: A Model for Regenerating Cities’ (Bruce Katz and Luise Noring, Brookings Institute, 1 June 2017) explains that housing development in the early 20th century, growth in vehicle ownership and public subsidisation of roading networks led to Copenhagen’s population being overrepresented by pensioners and university students, with a corresponding decline in city revenue.
As a response to the economic decline, steps were taken to encourage repopulation and economic growth. An alliance between central government and the mayor of Copenhagen emerged, their focus being the transformation of Copenhagen by encouraging housing investment and construction of modern infrastructure.
The financial resources to bankroll these initiatives did not come from growth in rates or taxes. Rather, the city’s untapped public land was developed, with the resulting revenue used to finance transport and infrastructure.
The first phase of this process was the construction of a railway linking downtown Copenhagen to the airport, passing through an area of state owned land formerly used by the Danish military. This land was rezoned to facilitate commercial, educational, retail and housing uses. A development company was established with the objective to develop the area to raise capital for the railway. Phases two and three involve further development activities in other parts of Copenhagen, including the port.
Similar patterns of urban sprawl and increased commuter traffic are evident in modern New Zealand cities. Like Copenhagen, Auckland has significant assets that could be used to fund its transport and infrastructure needs without increasing the burden on rate payers, including its shareholdings in Auckland Airport and Ports of Auckland.
The potential for a partial Initial Public Offering of the port business has been suggested as an option for partially funding this infrastructure.
Another alternative would be the development of the port’s waterfront land assets for commercial and residential uses, including a relocation of the port activities to an alternative location with a leasing arrangement during any transition period. The Copenhagen model places the responsibility for the management and urban redevelopment of the harbour in Port of Copenhagen Ltd, with the port activities conducted on leased land by that company and a Swedish joint venture partner.
Benefits from the Copenhagen model include the following:
- Ownership and value of public assets becomes more transparent as they are publicly disclosed.
- The regeneration agenda can be insulated from political interference and short term thinking/election cycles.
- Long-term strategic decision making and stewardship are promoted.
Auckland is not the only New Zealand city that could benefit from this model. Most major centres have resources at their disposal that could be more effectively utilised to provide funding for regeneration, renewal or infrastructure spending.
TPG has been involved in a number of projects across New Zealand which are endeavouring to regenerate or encourage positive economic growth through property assets. TPG was front and centre in assisting the regeneration of the central business district (CBD) of Christchurch and is continuing to work with Development Christchurch Limited to assist them in achieving positive social outcomes. TPG is engaged with Wellington City Council’s Urban Development Agency, whereby they are looking to achieve partnerships with private entities to deliver development projects. We also involved in a number of housing developments including Pomare Redevelopment, Northern Glen Innes and Tamaki Regenerate.
The Property Group’s team of specialist development managers, planners and property experts have the skills and experience to guide you through this process, or to add value to those who are involved in any resulting development activity.